Form 150-102-042 - Ach Credit Electronic Funds Transfer Program Guide (Page 9 of 11) in pdf

Glossary of Terms

ACH. “Automated Clearing House” (ACH) means

FRB. “Federal Reserve Bank” is the central banking

any entity that operates as a clearing house for elec-

system of the United States, consisting of 12 regional

tronic debit or credit entries pursuant to an agree-

reserve banks and member depository institutions

ment with an association that is a member of the

that are subject to Reserve requirements.

National Automated Clearing House Association.

NACHA. The “National Automated Clearing House

ACH Credit. An “ACH Credit” transaction is one in

Association” is the organization that establishes the

which you, the taxpayer, through your financial in-

standards, rules, and procedures enabling depository

stitution, originate an entry crediting the designated

financial institutions to exchange ACH payments on

financial institution’s account and debiting your

a national basis.

own account for the amount of the tax payment.

ODFI. The “Originating Depository Financial Insti-

ACH Debit. An “ACH Debit” transaction is one in

tution” is the financial institution that originates ACH

which you, the taxpayer, initiates an entry through

entries at the request of, and by agreement with, its

a secure internet connection or with a touchtone

customers. ODFIs must abide by the provisions of the

telephone, crediting the state’s designated financial

NACHA Operating Rules and Guidelines.

institution’s account and debiting your own account

Pre-note Test. A pre-notification (pre-note) test is a

for the amount of the tax payment.

zero-dollar entry sent through the ACH network to

CCD+. “Cash Concentration or Disbursement Plus

verify a financial institution’s information. A pre-

Addenda” is a standard National Automated Clear-

note test must be done at least 10 calendar days

ing House Association data format used to make

before EFT payments begin.

ACH credit/debit transactions. The CCD+ format

Settlement Date. The date an exchange of funds,

combines the widely used CCD format with a single

with respect to an entry, is reflected on the books of

addendum record that can carry 80 characters of

the Federal Reserve Bank.

payment-related data.

TXP. The “Tax Payment” banking convention is a

EFT. “Electronic Funds Transfer” is a term that identi-

national standard administered by NACHA. TXP is

fies any system used to transfer payments or funds

used by the federal government and the majority of

electronically. EFT refers to any transfer of funds

states that utilize EFT for tax collection. The format

(other than a transaction originated by check, , or

is carded in the 80-character free-form field of the ad-

similar paper instrument), that is initiated through

dendum record. The TXP convention has been devel-

an electronic terminal, telecommunications instru-

oped with input from corporate trade associations,

ment, computer, or magnetic tape, to order, instruct,

state representatives and federal government agency

or authorize a financial institution to debit or credit

representatives. The TXP convention is a result of the

an account.

joint efforts of the Federation of Tax Administrators,

the Committee on State Taxation, and the Bankers

Electronic Data Interchange (EDI) Council.

Form 150-102-042 - Ach Credit Electronic Funds Transfer Program Guide Page 9

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