Payroll and Tax Payment ACH Guide

18 Pages·2014·0.23 MB·English

Eastern OfficeConnect
SM
ACH Guide for
Payroll and Tax Payment
Table of Contents
Section Page
What is ACH, NACHA, and NEACH 3
• WhatisACH? 3
• WhatisNACHA? 4
• WhatisNEACH? 5
ACH Processing via OfficeConnect at Eastern Bank 5
• DailyProcessingforACH PayrollandTaxPayments via 5
OfficeConnect
• ACHProcessingTimeSchedule 5
• BusinessDayCalendar 5
ACH Returned and Notification of Change (NOC) Reporting 6
• ReturnEntries andNotificationofChange(NOC)Information 6
• ACHReturnReport –ReturnEntries 6
Return Reason Codes 7
ACH Return Report – Notification of Change (NOC) 9
Notification of Change (NOC) Codes 10
Standard Entry Class Codes 11
Procedure for Payroll and Tax Payment Reversal 12
Important NACHARules and Regulations 13
Sample Authorization Agreement 14
Glossaryof Terms 15
Rev. 02/2014 2
Eastern’sOfficeConnectonlinebankingplatformprovidesbusinesseswiththeabilitytosendpayrollandtax
paymentsviatheACHNetwork. Ourpaymentserviceforpayrollprovidesanefficientandcosteffectivewayfor
businessestotransmitpayrolldirectlytotheemployees'accountattheirfinancialinstitution. Similarly,businesses
mayalsoutilizethetaxpaymentservicetosendfederalandstatetaxpaymentselectronically.
ThepurposeoftheEasternOfficeConnectACHGuideistoprovideyou,ourbusinesscustomer,withessential
informationabouttheAutomatedClearingHouse(ACH)Network,ACHprocessingguidelinesspecifictoEastern
BankandimportantNACHArules,regulationsandcodestoensureaclearunderstandingoftheprocessandyour
rolesandresponsibilities.
What is ACH, NACHA, and NEACH
WHAT IS ACH?
The AutomatedClearingHouse(ACH)Network
TheACHNetworkisahighlyreliableandefficientnationwidebatch-orientedelectronicfundstransfersystem
governedbytheNACHAOPERATINGRULES,whichprovidefortheinterbankclearingofelectronicpaymentsfor
participatingdepositoryfinancialinstitutions.TheAmericanClearingHouseAssociation,FederalReserve,
ElectronicPaymentsNetwork,andVisaactasACHOperators,centralclearingfacilitiesthroughwhichfinancial
institutionstransmitorreceiveACHentries.
ACHpaymentsinclude:
 DirectDepositofpayroll,SocialSecurityandothergovernmentbenefits,andtaxrefunds
 DirectPaymentofconsumerbillssuchasmortgages,loans,utilitybillsandinsurancepremiums
 Business-to-businesspayments
 E-checks
 E-commercepayments
 Federal,stateandlocaltaxpayments
Originator
Anyindividual,corporationorotherentitythatinitiatesentriesintotheAutomatedClearingHouseNetwork
OriginatingDepositoryFinancialInstitution(ODFI)
AparticipatingfinancialinstitutionthatoriginatesACHentriesattherequestofandby(ODFI)agreementwithits
customers.ODFI'smustabidebytheprovisionsoftheNACHAOperatingRulesandGuidelines
ReceivingDepositoryFinancialInstitution(RDFI)
AnyfinancialinstitutionqualifiedtoreceiveACHentriesthatagreestoabidebythe NACHAOperatingRulesand
Guidelines
Receiver
Anindividual,corporationorotherentitywhohasauthorizedanOriginatortoinitiateacreditordebitentrytoa
transactionaccountheldatanRDFI.
Rev. 02/2014 3
StandardEntryClassCodesusedforPayrollandTaxPayments
ThesethreecharactercodeswithinanACHRecordidentifythepaymenttypescontainedwithinanACHbatch.
Type Consumer Applications Definition
Payroll PPD Application Directdepositisacreditapplicationthattransfersfunds
Prearranged intoaconsumer'saccountattheReceivingDepository
Paymentand FinancialInstitution.Thefundsbeingdepositedcan
DepositEntry representavarietyofproducts,suchaspayroll,interest,
pension,dividends,etc.
Preauthorizedpaymentisadebitapplication.Companies
withbillingoperationsmayparticipateintheACHthrough
theelectronictransfer(directdebit)ofbillpaymententries.
Throughstandingauthorizations,theconsumergrantsthe
companyauthoritytoinitiateperiodicchargestohisorher
accountasbillsbecomedue.
TaxPayments CCD+ CorporateDebit Thisapplication,CashConcentrationorDisbursement,can
orCredit beeitheracreditordebitapplicationwherefundsareeither
distributedorconsolidatedbetweencorporateentities.This
applicationcanserveasastand-alonefundstransfer,orit
cansupportalimitedamountofpaymentrelateddatawith
thefundstransfer.
CONSUMER VS. CORPORATE PAYMENTS
ACHtransactionsaretypicallycategorizedaseitherconsumerpaymentsorcorporatepayments,dependingonthe
relationshipofthepartiesinvolvedinthetransactionandthetypeofReceiveraccount.Inaddition,paymentsare
distinguishedasFederalGovernmentpayments(representingautomateddisbursementsoriginatingfromthe
UnitedStatesGovernment,suchasSocialSecuritybenefits,militaryandcivilianpayrolls,retirementbenefits,tax
refunds,anddisbursementsforstateandfederalrevenuesharingprograms)orcommercialpayments(initiatedby
bothindividualconsumersandcorporations). ConsumerpaymentscurrentlymadeviatheACHNetworkinclude
creditapplicationssuchaspayroll,retirement,dividend,interest,andannuitypayments,inadditiontoeducational
benefitreimbursements,paymentsandadvances,andmanyothers.ConsumerACHdebitapplicationsinclude,
amongothers,thecollectionofinsurancepremiums,mortgageandrentpayments,utilitypayments,installment
payments,avarietyofmembershipdues,andotherrecurringobligations.
TheACHNetworkisalsowidelyusedtosettleconsumertransactionsmadeatautomatedtellermachinesand
point-of-saleterminals. CorporateACHapplicationsincludecashconcentrationanddisbursement,corporatetrade
payments,stateandFederaltaxpaymentsandfinancialelectronicdatainterchange(EDI).Cashconcentrationand
disbursementallowscompaniestoachieveefficienciesincashmanagementthroughtimelyintra-companytransfer
offunds.Corporatetradepaymentsenablecorporationstoexchangebothdataandfundswithtradingpartners,
facilitatinganautomatedprocessofupdatingtheiraccounts receivableandaccountspayablesystems.
WHAT IS NACHA?
NACHA-TheElectronicPaymentsAssociationistheleadingorganizationindevelopingelectronicsolutionsto
improvethepaymentssystem.
NACHAdevelopsoperatingrulesandbusinesspracticesfortheAutomatedClearingHouse(ACH)Networkandfor
electronicpaymentsintheareasofInternetcommerce,electronicbillandinvoicepresentmentandpayment
(EBPP,EIPP),e-checks,financialelectronicdatainterchange(EDI),internationalpayments(IAT),andelectronic
benefitstransfer(EBT).
Rev. 02/2014 4
NACHA'sMissionistopromotethedevelopmentofelectronicsolutionsthatimprovethepaymentssystemforthe
benefitofitsmembersandtheircustomers.
NACHAisdedicatedtoimprovingthepaymentssystemthroughitseightprimaryfunctions.Theseare:
1. RulemakingfortheACHNetworkandotherpaymentssystems;
2.Facilitatingthedevelopmentofnewpaymentapplications;
3.Identificationandimplementationofriskmanagementinitiatives;
4.Providingandsupportingeducationprograms;
5.Institutingandmonitoringqualitycontrolsinthepaymentssystem;
6.Improvingmembercommunications/relations;
7.Respondingtoregulatoryandgovernmentrelationsissues;and
8.Marketingelectronicpaymentservices.
WHAT IS NEACH?
"TheNewEnglandAutomatedClearingHouse”(NEACH)isanon-profitassociationthathelpsmembersoriginate
andreceiveACHtransactions,andprovidesproducts,services,educationandmarketingtoincreasethe
acceptance,useandqualityofelectronictransactions.
ACH Processing via OfficeConnect at Eastern Bank
EasternBank,actingastheODFI,isboundbytheNACHArulesandregulations,butday-to-dayprocessing
timeframesandprocessesdifferbetweenbanks. Thissectionoftheguidereviewsprocessingguidelinesat
EasternBank.
DailyProcessing for ACH Payroll and Tax Payments via OfficeConnect
UtilizingOfficeConnecttotransmitACHinformationcanbedoneatanytimeoftheday,however,therearecertain
timesduringthedaywheninformationiscollectedfromtheOfficeConnectplatformandprocessedthroughour
ACHprocessingsystemfortheACHtransactionsthatareinputasoutlinedintheprocessingtimeschedulebelow.
ACH Processing Time Schedule:
TheprocessingtimescheduleforACHtransactionsis:
6:15a.m.ET 2:45p.m.ET
10:15a.m.ET 3:45p.m.ET
12:45p.m.ET 6:00p.m.ET
ACHtransactionswillbedistributedbytheeffectivedate.Toensuretransactionsareprocessedtimely,
transactionsmustbesenttwobusinessdayspriortotheeffectivedate.
Anytransactionsorbatchesprocessedafterthe2:45p.m.ETwindowmaynotbeprocessedthesamedayifthere
areanydelaysorthefileexceedsthecreditlimitofthecustomer.
Business Day Calendar
EasternBankoperatesontheFederalHolidaycalendar. AnyACHpayrollandtaxpaymentstransmittedafterthe
lastcut-offtime,onaweekendoraholidaywillbeprocessedonthenextbusinessday.
Rev. 02/2014 5
ACH Returned and Notification of Change (NOC) Reporting
EasternBankreceivesReturnedentriesandNotificationsofChange(NOC)fromRDFI’sonadailybasis.Theyare
communicatedtotheOriginatorwithin2businessdaysofthesettlementdate.
Return Entries and Notification of Change (NOC) Information
EasternBankwillprovideareportviaasecureemailtotheaddressoutlinedontheapplicationformthatwillinform
youofanyReturnentriesorNOC’stoACHoriginateditemsthatwereceivefromRDFI’s. Thisreportiscalledthe
ACHReturnItemsReport
ForanyReturnentriesafinancialadjustmentwillbemadetoyouraccountatEasternBankforeachindividualitem.
Itisyourresponsibilityastheoriginatortodeterminethechanges,basedontheReturnorCorrectioncodethat
musttobemadeonyoursystem(s)ordatarecords.Ifyoureceivea NOC(notificationofchange)anentrymustnot
betransmittedagaincontainingtheincorrectinformationorthechangemustbemadewithin6businessdaysto
avoidanyfinesasoutlinedintheNACHArules.
ACH Return Report – Return Entries
BelowisasampleoftheACHReturnreportwithareturnreasoncodeandalegendonthedatafields.
Descriptionsforreturnreasoncodesmaybefoundbeginningonthenextpage.
ACH Return ItemNoticeLegend
① Receiving Transaction Account # ⑪ Transaction Type – PPD, CCD, CTX etc.
② Return Transaction Code ⑫ Your ACH ID - Tax ID #
③ Transaction Type – DR/CR ⑬ Return Code – See table for value descriptions
④ Original Transaction Amount ⑭ Original Trace #
⑤ Customer ID Data ⑮ Original Effective Entry Date
⑥ Customer Name ⑯ Originating Bank ABA-Eastern Bank ABA -
01130179
⑦ Receiving Bank ABA ⑰ Addendum Information Relative to the Return
⑧YourACHCompanyName
Rev. 02/2014 6
Return Reason Codes
R01 InsufficientFunds.Theavailableand/orcashreservebalanceisnotsufficienttocoverthedollarvalueofthedebitentry.
R02 AccountClosed.ApreviouslyactiveaccounthasbeenclosedbyactionofthecustomerortheRDFI.
R03 NoAccount/UnabletoLocateAccount.Theaccountnumberstructureisvalidanditpassesthecheckdigitvalidation,but
theaccountnumberdoesnotcorrespondtotheindividualidentifiedintheentry,ortheaccountnumberdesignatedisnot
anopenaccount.
R04 InvalidAccountnumber.Accountnumberstructureinvalidormayfailthecheckdigitvalidation.
R05 UnauthorizedentrytoaconsumeraccountbearingaCorporateSECcode. Thoseare:CCD,CTX.
R06 ReturnedperODFI'sRequestTheODFIhasrequestedthattheRDFIreturntheACHentry.IftheRDFIagreestoreturn
theentry,theODFImustindemnifytheRDFIaccordingtoArticleFive(Return,Adjustment,Correction,and
AcknowledgmentofEntriesandEntryInformation)oftheseRules.
R07 AuthorizationRevokedbyCustomer(adjustmententries)TheRDFI'scustomer(theReceiver)hasrevokedthe
authorizationpreviouslyprovidedtotheOriginatorforthisparticulartransaction.TheReceivermayrequestimmediate
creditfromtheRDFIforanunauthorizeddebit.Therequestmustbemadeinwritingwithinfifteen(15)daysaftertheRDFI
sendsormakesavailabletotheReceiverinformationpertainingtothatdebitentry.
R08 PaymentStoppedorStopPaymentonItem
R09 UncollectedFundsSufficientbookorledgerbalanceexiststosatisfythedollarvalueofthetransaction,butthedollarvalue
oftransactionsintheprocessofcollection(i.e.,uncollectedchecks)bringstheavailableand/orcashreservebalance
belowthedollarvalueofthedebitentry.
R10 CustomerAdvisesNotAuthorized;ItemIsIneligible,NoticeNotProvided,SignaturesNotGenuine,orItemAltered
(adjustmententries).
R11 CheckTruncationEntryReturn(Specify)Tobeusedwhenreturningachecktruncationentry.Thisreasonforreturn
shouldbeusedonlyifnootherreturnreasoncodeisapplicable.TheRDFIshouldusetheappropriatefieldintheaddenda
recordtospecifythereasonforreturn(i.e.,"exceedsdollarlimit,""nomatchonARP,""staledate,"etc.).
R12 BranchSoldtoAnotherDFI[AccountSoldtoAnotherDFI]
R14 RepresentativePayeeDeceasedorUnabletocontinueinthatcapacity. Representativepayeeisapersonorinstitution
authorizedtoacceptentriesonbehalfofoneormoreotherpersons,suchaslegallyincapacitatedadultsorminorchildren.
Representativepayeeiseitherdeceasedorunabletocontinueinthatcapacity.Beneficiaryisnotdeceased.
R15 BeneficiaryorAccountHolder(OtherThanaRepresentativePayee)Deceased(1)Thebeneficiaryisthepersonentitledto
thebenefitsandisdeceased.Thebeneficiarymayormaynotbetheaccountholder;orTheaccountholder(actingina
non-representativepayeecapacity)isanowneroftheaccountandisdeceased.
R16 AccountFrozenThefundsintheaccountareunavailableduetospecificactiontakenbytheRDFIorbylegalaction.
R17 FileRecordEditCriteria(Specify)SomefieldsthatarenoteditedbytheACHOperatorareeditedbytheRDFI.Iftheentry
cannotbeprocessedbytheRDFI,thefield(s)causingtheprocessingerrormustbeidentifiedintheaddendarecord
informationfieldofthereturn.
R20 Non-TransactionAccount.TheACHentrydestinedforanon-transactionaccount,asdefinedinRegulationD,would
includeeitheranaccountagainstwhichtransactionsareprohibitedorlimitedorapass-throughwheretheentryisfora
creditunionorthriftorganizationandRegulationEdescriptiverequirementscannotbemet.
R22 InvalidIndividualIDNumber. TheIndividualIDNumberofCIEorMTEtypeentriesisusedbytheReceiver(non-
consumer)thataspecifictransactionhasnotbeenauthorizedbytheReceiver.
Rev. 02/2014 7
Return Reason Codes (continued)
R23 CreditEntryRefusedbyReceiver.TheReceivermayreturnacreditentrybecauseoneofthefollowingconditionsexists:
(1)aminimumamountrequiredbytheReceiverhasnotbeenremitted;(2)theexactamountrequiredhasnotbeen
remitted;(3)theaccountissubjecttolitigationandtheReceiverwillnotacceptthetransaction;(4)acceptanceofthe
transactionresultsinanoverpayment;(5)theOriginatorisnotknownbytheReceiver;or(6)theReceiverhasnot
authorizedthiscreditentrytothisaccount.
R24 DuplicateEntry.TheRDFIhasreceivedwhatappearstobeaduplicateentry;i.e.,thetracenumber,date,dollaramount
and/orotherdatamatchesanothertransaction.Thiscodeshouldbeusedwithextremecare.TheRDFIshouldbeaware
thatifafilehasbeenduplicated,theOriginatormayhavealreadygeneratedareversaltransactiontohandlethesituation.
R29 CorporateConsumerAdvisesNotAuthorized. TheRDFIhasbeennotifiedbytheReceiver(non-consumer)thataspecific
transactionhasnotbeenauthorizedbytheReceiver.
R31 PermissibleReturnEntry(CCDandCTXonly).TheRDFIhasbeennotifiedbytheODFIthattheODFIagreestoaccepta
CCDorCTXreturnentryinaccordancewithArticleSeven,section7.3(ODFIAgreestoAcceptCCDorCTXReturn).
R62 IncorrectTraceNumberTheTraceNumberfoundinpositions07-21intheAddendaRecordofthereturnentryisdifferent
fromthetracenumberoftheoriginalentry.
R63 IncorrectDollarAmountThedollaramountintheEntryDetailRecordofthereturnentryisdifferentfromthedollaramount
oftheoriginalentry.
R64 IncorrectIndividualIdentificationTheIndividualIdentificationNumberreflectedintheEntryDetailRecordofthereturn
entryisdifferentfromtheIndividualIdentificationNumber/IdentificationNumberusedintheoriginalentry.
R65 IncorrectTransactionCodeTheTransactionCodeintheEntryDetailRecordofthereturnentryisnotthereturnequivalent
oftheTransactionCodeintheoriginalentry.(SeelistofTransactionCodesinAppendixTwo(ACHRecordFormat
Specifications).Allentriesmustbereturnedasreceived:e.g.,creditascredit,debitasdebit,demandasdemand,savings
assavings.)
R66 IncorrectCompanyIdentificationTheCompanyIdentificationnumberusedintheCompany/BatchHeaderRecordofthe
returnentryisdifferentfromtheCompanyIdentificationnumberusedintheoriginalentry.
R67 DuplicateReturnTheODFIhasreceivedmorethanonereturnforthesameentry.
R68 UntimelyReturnThereturnentryhasnotbeensentwithinthetimeframeestablishedbytheserules.
R69 MultipleErrorsTwoormoreofthefollowingfields--OriginalEntryTraceNumber,Amount,IndividualIdentification
Number/IdentificationNumber,CompanyIdentification,and/orTransactionCode--areincorrect.
Rev. 02/2014 8
ACH Return Report – Notification of Change (NOC)
ACHReturnItemsReport –Notificationof Change (NOC) Legend
① Receivers Account Number ⑪ Origination Date
② Return Trace Number ⑫ Your ACH Company ID
③ Transaction Code and Type (DR/CR) ⑬ Correction Reason Code – See attached definition listing
④ Customer ID ⑭ Original Transaction Trace Number
⑤ Customer Name ⑮ Correction Posting Effective Date
⑥ Receiving Customers Bank ABA Number ⑯ Receiving Bank ABA Number
⑦ Your ACH Company Name ⑰ Addendum Information Field – Contains correct
⑧ Entry Description information that caused the error
⑨ Correction Settlement Date
⑩ SEC Type - COR
Rev. 02/2014 9
Notification of Change (NOC) Codes
ANotificationofChangeiscreatedbyanRDFItonotifytheODFIthatpreviouslyvalidinformationcontainedina
postedentryhasbecomeoutdatedorthatinformationcontainedinapre-notificationorlivetransactioniserroneous
andshouldbechanged.
Change Codes
C01 IncorrectDFIAccountNumber
C02 IncorrectRoutingNumberCorrectRoutingNumber(includingCheckDigit)appearsinfirstninepositionsofthe
CorrectedDataField.
C03 IncorrectRoutingNumberandIncorrectDFIAccountNumber.CorrectRoutingNumber(includingCheckDigit
Example:Duetomergerorconsolidation,aoncevalidRoutingNumbermustbechanged,andinmostinstances
thischangewillcauseachangetotheaccountnumberingstructure.
C04 IncorrectIndividualName/ReceivingCompanyName.CorrectIndividualName/ReceivingCompanyName
C05 IncorrectTransactionCodeExample:Anitem,whichtheRDFIdeterminesshouldbepostedtotheirDemand
DepositAccount(DDA)System,containsaSavingsTransactionCode.
C06 IncorrectDFIAccountNumberandIncorrectTransactionCode.Example:Anentrypostingtoasavingsaccount
shouldactuallybegoingtoademandaccountorviceversa,andtheaccountnumberisalsoincorrect.
C07 IncorrectRoutingNumber,IncorrectDFIAccountNumber,andIncorrectTransactionCode
C09 IncorrectIndividualIdentificationNumber.Example:Individual'sIdentificationNumberwithintheCompanyis
incorrect,eitheroninitialinputorthroughmergerorconsolidation. Note:ChangeCodesC10throughC12cover
informationcontainedintheBatchHeaderRecordandthereforewillrequirethecreationofadummyEntryDetail
Record(s)tomeetthesoftwarerequirements.
C11 Duetomergerorconsolidation,theCompanyIDisnolongervalid.
C13 AddendaFormatErrorInformationintheEntryDetailRecordwascorrectandtheentrywasabletobeprocessed
andpostedbytheRDFI.However,informationfoundintheAddendaRecordwasunclearorwasformatted
incorrectly.
Rev. 02/2014 10