Section 5.12 - Processing Payments Through Electronic Funds Transfers(a) Applicability. These rules govern EFT payments by the comptroller on behalf of custodial and paying state agencies as part of the electronic funds transfer system authorized by Government Code, § 403.016.(b) Definitions. The following words and terms, when used in this subchapter, have the following meanings, unless the context clearly indicates otherwise.(1) Automated clearing house (ACH)--A central distribution and settlement point for the electronic clearing of debits and credits between financial institutions subject to regulation under rules of an automated clearing house association and applicable regulatory law.(2) ACH rules--The operating rules and guidelines governing the ACH network published by NACHA, the Electronic Payments Association and applicable federal regulatory law.(3) Comptroller--The Comptroller of Public Accounts for the State of Texas.(4) Credit entry--A type of EFT entry that the comptroller initiates on behalf of a paying state agency to credit a state payee's EFTS account at a domestic financial institution.(5) Custodial state agency--A state agency that establishes and maintains the state payee's account information. The custodial state agency may or may not be the paying state agency.(6) Direct deposit--A form of EFT payment using ACH for the electronic transfer of funds directly into a state payee EFTS account at a domestic financial institution.(7) Electronic funds transfer (EFT)--A transfer of funds which is initiated by the comptroller as originator to the originating depository financial institution to order, instruct, or authorize a receiving depository financial institution to perform a credit entry, reversal, or reclamation in accordance with this subchapter. For purposes of these rules, an EFT does not include a transaction originated by wire transfer, check, draft, warrant, or other paper instrument.(8) EFTS authorization--A state payee's agreement to allow the comptroller to originate state-issued payments by EFT on behalf of a paying state agency to a state payee EFTS account. A state payee may provide EFTS authorization and notice under Government Code, § 403.016 by: (A) submitting an EFTS authorization with a state payee's agreement on a comptroller approved form; or(B) providing an agreement to a custodial state agency or a paying state agency in a manner deemed appropriate by that agency and the comptroller, and as required by law and NACHA rules.(9) EFTS form--An electronic or paper form submitted by a state payee as part of the EFTS. An EFTS form used by a custodial state agency or paying state agency is subject to comptroller approval.(10) Electronic funds transfer system (EFTS)--A system authorized by Government Code, § 403.016, that is administered by the comptroller in accordance with these rules to make EFT payments to state payees on behalf of a paying state agency.(11) Financial institution--A state or national bank, a state or federal savings and loan association, a mutual savings bank, or a state or federal credit union that complies with NACHA rules and may be an originating depository financial institution or a receiving depository financial institution.(12) International ACH transaction (IAT)--An ACH entry involving a financial agency (as defined by NACHA rules) that is not located in the territorial jurisdiction of the United States. An international ACH transaction may be referred to as an IAT entry or IAT.(13) May not--A prohibition. The term does not mean "might not" or its equivalents.(14) NACHA--The National Automated Clearing House Association is the electronic payments association that establishes standards, rules and procedures that enable domestic financial institutions to exchange payments electronically.(15) Notification of change (NOC)--Information sent by a financial institution through the ACH network to notify the comptroller that previously valid information for a state payee has become outdated or that information contained in a prenotification is erroneous.(16) Originating depository financial institution--A financial institution that originates ACH entries on behalf of the comptroller and transmits ACH entries through the ACH network in accordance with NACHA rules.(17) Originator--The comptroller acts as the originator and authorizes an originating depository financial institution to transmit, on behalf of the state, a credit entry, reclamation, reversal, or prenotification entry to a state payee EFTS account at a domestic financial institution.(18) Pay card --A payment card issued to a state employee or annuitant that provides access to payroll, travel reimbursement, or retirement payments deposited to a designated account at a domestic financial institution as part of the EFTS through the comptroller's pay card contract.(19) Paying state agency--A state agency for which the comptroller initiates payment. The term includes the comptroller of public accounts. A paying state agency may or may not be the custodial state agency.(20) Prenotification--A non-dollar entry sent by the comptroller through the ACH network to alert a receiving depository financial institution that a live dollar credit entry will be forthcoming and to request verification of the state payee's EFTS account information.(21) Receiving depository financial institution--A financial institution that receives ACH entries to a state payee EFTS account.(22) Reclamation--A request made by the comptroller in compliance with NACHA rules, to an originating depository financial institution to reclaim from a receiving depository financial institution any amounts received by a state payee after the state payee's death or legal incapacity, or the death of a beneficiary of a state payee.(23) Regulation E--The regulations adopted by the Bureau of Consumer Financial Protection at 12 C.F.R. Part 1005, as they may be amended, to implement the Electronic Fund Transfer Act (15 U.S.C. § 1693et seq.).(24) Reversal--An EFT entry initiated by the comptroller at the request of a paying state agency to correct an erroneous credit entry previously transmitted to a state payee EFTS account. The comptroller may initiate a reversal of an EFT payment of state employee payroll or retirement in compliance with NACHA rules.(25) State agency-- (A) a department, commission, board, office, or other agency in the executive or legislative branch of state government that is created by the constitution or a statute of this state, including the comptroller of public accounts;(B) the supreme court of Texas, the court of criminal appeals, a court of appeals, or a state judicial agency; or(C) a university system or an institution of higher education as defined by Education Code, § 61.003 other than a public junior college.(26) State payee--A person to whom a state payment is issued, including an individual, state employee, annuitant, business, vendor, governmental entity, or other legal recipient paid by the State of Texas.(27) State payee EFTS account--An account at a domestic financial institution designated by a state payee for EFTS payments.(28) Warrant--A state payment in the form of a paper instrument which is subject to applicable state law, is drawn on the State of Texas treasury funds, and is payable to a state payee on behalf of a paying state agency by the comptroller or by a state agency with delegated authority to issue warrants under Government Code, § 403.060. A warrant is not an approved means of electronic funds transfer as set out in subsection (c) of this section.(29) Wire transfer--An unconditional order to a financial institution to pay a fixed or determinable amount of money to a state payee upon receipt or on a day stated in the order that is transmitted by electronic or other means. Wire transfer is not an approved means of electronic fund transfer, as set out in subsection (c) of this section.(c) Approved types of EFTS payments.(1) The comptroller will approve the types of EFTS payments the state may use by rule and amend the approval based upon the comptroller's procedures and current technology.(2) EFTS payment types approved by the comptroller to a state payee EFTS account include: (A) direct deposit, except an IAT; and(3) Any other type of payment which is not an approved type of EFTS payment under paragraph (2) of this subsection is not considered to be an approved type of EFTS payment under these rules. Warrants, wire transfers, and IAT are not approved types of EFTS payments.(d) Compliance with applicable NACHA rules and regulation. Each participant in the EFTS, including the comptroller, the paying state agency, the custodial state agency, and the state payee, shall comply with applicable law and NACHA regulations in EFTS transactions.(e) Confidentiality. Each participant in the EFTS, including the comptroller, the paying state agency, the custodial state agency, and the state payee, shall comply with applicable confidentiality requirements under the law, including maintaining the confidentiality of financial institution account numbers and state payee social security numbers.(f) Audit. The comptroller is subject to audit by NACHA for compliance with NACHA rules concerning EFT transactions under this chapter. The comptroller may audit a paying or custodial state agency for compliance with applicable regulatory or NACHA rules concerning EFT transactions under this chapter. A paying or custodial state agency shall comply with an audit under this chapter.(g) Notification. (1) Any questions, comments, or complaints concerning the comptroller's electronic funds transfer system as it relates to Government Code, §403.016 and these rules may be sent to the comptroller by mail to: Texas Comptroller of Public Accounts, Fiscal Management, 111 E. 17th Street, Room 1010.9, Austin, Texas, 78711, or by email to tins.mail@cpa.texas.gov, or at such other email address as the comptroller may designate.(2) The comptroller may provide additional information and updates on its website regarding notification.(3) The comptroller may require the custodial state agency, the paying state agency, the state payee, and the financial institution to provide contact information as appropriate.(h) Conflict of law. If there is a conflict in law between any of these rules and applicable law, the applicable law shall apply. If any provision of these rules is held to be invalid, illegal, or unenforceable due to a conflict of law, it will not affect any other provisions of these rules, and the rules will be construed as if such invalid or illegal or unenforceable provision had never been contained herein.34 Tex. Admin. Code § 5.12
The provisions of this §5.12 adopted to be effective June 10, 1992, 17 TexReg 3909; amended to be effective December 6, 1996, 21 TexReg 11520; Adopted by Texas Register, Volume 40, Number 08, February 20, 2015, TexReg 825, eff. 2/23/2015; Amended by Texas Register, Volume 41, Number 27, July 1, 2016, TexReg 4861, eff. 7/6/2016; Amended by Texas Register, Volume 43, Number 30, July 27, 2018, TexReg 4987, eff. 7/31/2018; Amended by Texas Register, Volume 48, Number 19, May 12, 2023, TexReg 2507, eff. 5/18/2023