Lesson 2: Direct Deposit Forms

International ACH Transactions (IATs)

What Is an IAT?

An IAT is an automated clearing house (ACH) transaction whose funds are forwarded to a foreign financial institution outside the United States. The Comptroller’s office does not participate in IATs, as noted in Prohibition on International Payments . State agencies are required to do their due diligence to prevent their payees from transferring 100 percent of their state payments to a foreign financial institution.

The IAT Question on Forms

To ensure compliance with the Comptroller’s policy on international payments, all direct deposit authorization forms must contain the IAT question Section 5, International Payments Verification, of the Comptroller’s Form 74-176. Agencies that use a Comptroller-approved form or a Comptroller-approved method must include the question “Will these payments be forwarded to a financial institution outside the United States?” and require a response of yes or no.

If the payee answers yes, the agency must provide the payee with the Comptroller’s ACH (Direct Deposit) Payment Destination Confirmation form (74-227), which must be returned to the agency for retention with the authorization form.

When 100 Percent of the Payment Is Indicated

If the payees indicate on form 74-227 that 100 percent of their state payments will be transferred to a foreign financial institution, they must not be set up for direct deposit. The agency should place a Y in the IAT IND field on the payee’s master record. See:

• Prohibition on Direct Deposit to Financial Institutions Outside the United States webpage on TexPayment Resource for how to set the IAT indicator; it also references the Payee Master Level Setup (PMSTUP) screen.
• The IAT and TINS IAT Indicator Tutorial for information about state and federal compliance.

When Less Than 100 Percent Is Indicated

If the payee indicates they plan to transfer less than 100 percent of their state payments to a foreign financial institution, the agency can proceed with setting up direct deposit to the payee’s domestic financial institution. In this case, the agency should not update the IAT IND field on PYMAST. The agency must retain form 74-227 with the authorization form for audit purposes to support its direct deposit payments to the payee.

For questions about IAT, contact the Comptroller’s Payment Services help desk at (512) 936-8138 or payment.services.dd@cpa.texas.gov.

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