When we find that partners in a particular industry or government sector need to exchange payments and information in a specialized way, we collaborate to figure out the best use of the ACH Network. Banking conventions, or the formats used to present data in an Addenda Record, are one way that Nacha has adapted the ACH Network to meet specific needs. Using the right convention with the right payment process means smarter, more efficient electronic transfers.
When payments are made using the ACH Network for specific purposes, banking conventions provide a standardized way to format additional detailed information so the payment is more easily and readily applied. Nacha has three such banking conventions that are actively used: Tax Payment, Third-Party Tax Payments and Child Support. The linked implementation guides contain an overview of the formatting for each convention; for complete information on ACH Record Formats, see the Nacha Operating Rules.
(revised December 2012)
This convention simplifies taxes for businesses by allowing them to transmit an ACH credit payment, with remittance detail, in a single transaction. Nacha has collaborated with industry partners to make TXP the standard means of business tax remittance, in a Corporate Credit or Debit (CCD) transaction, for the majority of the states, as well as many cities, counties and municipal tax authorities.
(revised July 2013)
The TPPparty payer and the taxpayer for whom the payment is being made:
- When employee tax withholdings are remitted by payroll service providers on behalf of employers.
- When employers remit payments in response to tax agency orders to produce employee wages for tax liability.
(revised February 2017)
This banking convention automates child support obligations, making it easy for an employer to electronically withhold the required portion of an employee’s paycheck and send that amount to the State Disbursement Units (SDUs). All SDUs are capable of accepting employer-originated child support withholding payments in this format.
As electronic payments have grown, so has their use across national borders. To ensure that cross-border payments are both efficient and secure, Nacha worked with the Office of Foreign Assets Control (OFAC) to develop a new ACH format that includes information on all parties to the transactions. This format allows RDFIs to easily comply with the Rules and streamline international payments.
International ACH Transactions (IATs) are now regulated under a Rule, which includes two major points:
It requires Gateway Operators to classify payments that are transmitted to or received from a financial agency outside the territorial jurisdiction of the U.S. as International ACH Transactions (IAT).
It includes information on all parties to the ACH transactions.
The Rule benefits RDFIs by making it easier to determine whether a transaction is domestic or international. It also allows those institutions to comply with legal obligations by including additional data and screening indicators, making it easier for RDFIs to intercept unlawful transactions.
The IRS Refund Opt-In Program was developed by the IRS and Nacha to make it easier for financial institutions to return tax refund credits in cases of suspected error or fraud.
What’s In It For You?
Numerous financial institutions, as well as the IRS and Bureau of the Fiscal Service, leverage Nacha Operating Rules and formats to recover questionable tax refunds sent via ACH PPD credits. The effort aims to improve government and financial institution operations and processing and to prevent future fraudulent refunds.
Participate in the Program
If you would like to participate in the IRS Refund Return Opt-In Program, please download and sign the agreement linked at the bottom of this page, then return it to Nacha. Submissions can be made online or through email to Nacha-Network-Rules@Nacha.org. Alternatively, submissions can be made to the Attn: IRS Refund Return Opt-In Program via fax ((703) 787-0996) or U.S. Mail (2550 Wasser Terrace Ste 400, Herndon, VA 20171). If you have questions related to the program contact Amy Morris at AMorris@Nacha.org.
Get all the details
For more information, download the Industry Briefing Presentation and supporting documents referenced during the presentation, linked in the resource section:
- External Leads Credit Gateway Rollout Briefing
- Lead Submission Spreadsheet (October 2017)
- IRS External Leads Fact Sheet
ACH Originators are currently preparing for an upcoming Nacha Operating Rule. A screening requirement will be supplemented to make it explicit that account validation is part of a commercially reasonable fraudulent transaction detection system. An extension of the effective date of this Rule allows for additional time, education and guidance to the industry to put processes in place. Visit our Account Validation Resource Center for more information and resources to prepare for the upcoming Rule.
Request for Payment allows businesses to send electronic invoices and receive corresponding payment and remittance through the ACH Network, supporting straight-through processing, creating efficiencies, and providing for cost savings.
What Is It?
Request for Payment is a standardized ACH Network message that businesses can leverage to send electronic invoices to customers via the ACH Network, and their customers can, in turn, use to make payment and share corresponding remittance information.
Businesses can benefit significantly by leveraging the ACH Network to send electronic invoices and collect payment. From an Order-to-Cash perspective, businesses can:
- Leverage global standards (ISO 20022 messaging) to reach any customer's/trading partner's bank
- Increase electronic payment adoption by customers, and get paid faster and more efficiently
- Receive remittance with payment for immediate posting, improving cash application
- Implement with little to no system changes as businesses can leverage existing ERP software and treasury services
From a Procure-to-Pay Perspective, businesses can:
- Improve cash management with timely invoice receipt and greater control of payment scheduling
- Reduce costly Accounts Payable errors and improve related controls
- Reduce the expense associated with paper invoices and checks
How Can Businesses Participate?
Businesses of all sizes can leverage the Request for Payment ACH Network message. Businesses will simply need to agree to the Request for Payment rules by including them or referencing them within existing trading agreements.
Developed by the State Revenue Agencies and Nacha, the State Tax Refund Return Opt-In Program makes it easier for financial institutions to return tax refund credits in cases of suspected error or fraud.
What’s In It For You?
Numerous financial institutions, as well as their state revenue agency customers, leverage Nacha Operating Rules and formats to recover questionable tax refunds sent via ACH credits. The effort aims to improve government and financial institution operations and processing and to prevent future fraudulent refunds.
Participate in the Program
If you would like to participate in the State Tax Refund Return Opt-In Program, please download and sign the agreement linked at the bottom of this page, then return it to Nacha. Submissions can be made online or through email to Nacha-Network-Rules@Nacha.org. Alternatively, submissions can be made to the Attn: State Tax Refund Return Opt-In Program via fax ((703) 787-0996) or U.S. Mail (2550 Wasser Terrace Ste 400, Herndon, VA 20171). If you have questions related to the program contact Amy Morris at AMorris@Nacha.org.
In addition to the State Tax Refund Return Opt-In Program, states may also participate in the External Leads program to offer additional options for the handling of potentially suspicious tax credits. See the fact sheet below for additional details.
The below roster contains the current list of participating states and corresponding ODFIs. A Participating RDFI may return a suspicious return under this program to any Participating State/ODFI.
Learn more about becoming a Participating State. States or their ODFIs wishing to become a participant should also contact Amy Morris at email@example.com
- State Tax Refund Opt-In Program - RDFI Program Rules and Agreement - (download)
- State Tax Refund Opt-In Program - RDFI Program Rules and Agreement - (download/online submission)
The XML-ACH allows businesses to safely and securely transmit ISO 20022 approved payment remittance information for B2B transactions in a standardized XML format via the ACH Network.
How It Works
The XML-ACH Program defines rules for the exchange of ISO 20022 formatted remittance messages between opt-in participants. These rules define participant roles, requirements and warranties, and refer to the ISO 20022 catalog of messages for the data dictionary and schema for initiating transactions.
- ISO 20022 approved remittance formats
- Nacha defined tool for mapping to ISO 20022 remittance messages
- Opt-in usage for financial institutions, service providers and corporates
- Identical process flow compared to EDI (Electronic Data Interchange)
- Harmonization between ACH formatting and wire transfer formatting (ISO 20022)
What’s In It For You?
Participants enjoy better efficiency, improved automation and flexibility in the payment processing life cycle. Additional benefits include:
- Facilitate greater flexibility and modern formats for B2B transactions
- Enable electronic remittance exchanges with small/midsize companies
- Develop additional revenue streams for payments remittance services
- Leverage greater usage of XML in financial services
- Provide straight-through processing of payment-related information
Participate in the Program
Financial institutions and service providers offering payment origination or receivables services to financial institutions and corporates may participate in the XML-ACH Program. XML-ACH data is available for use with ACH Network CTX (Corporate Trade Exchange) credit transactions among organizations that specifically opt-in to this Nacha program.
Read the Rules
All participants must complete an agreement with Nacha. This both ensures compliance with the Rules and certifies participants’ eligibility for sending and receiving XML-formatted remittance addenda records. For further information and details, view the XML-ACH Rules and Opt-In Participant Agreement through the Nacha Operating Rules Online, or try a Demo of XML-ACH Remittance.