Green Book

What Is Green Book?

Green Book can refer to a comprehensive guide for financial institutions processing federal government automated clearing house (ACH) transfers and payments, or a publication that informs the Federal Open Market Committee (FOMC) about market projections to aid them in their monetary policy decisions. A Green Book is also released by the U.S. government's Treasury Department to explain an administration's budgetary tax proposals.

Key Takeaways

  • Green Book can refer to a comprehensive guide for financial institutions processing federal government automated clearing house (ACH) transfers and payments,
  • The Federal Reserve Greenbook is a publication that informs the Federal Open Market Committee (FOMC) about market projections to aid them in their monetary policy decisions.
  • The U.S. Treasury Department releases a Green Book to explain tax proposals contained in a budget.

Understanding Green Book

Depending on the context and the agency issuing it, a Green Book can refer to different publications. A Greenbook issued by the Federal Reserve documents the state of the global economy. A Green Book is also issued by the Bureau of Fiscal Service in the Treasury Department that details rules governing the sending and receipt of automated clearing house (ACH) funds between financial institutions. Finally, the United States Treasury also issues a Green Book to explain tax proposals contained in an administration's budget for the given fiscal year.

Federal Reserve Greenbook

The Federal Reserve has several "books" that provide information about various aspects of the economy so that the members of the FOMC can make make better decisions with respect to monetary policy. The Greenbook, which analyses both U.S. and international economies to forecast financial markets, is one such publication. It assesses current economic and financial indicators for the domestic and global economy and provides an outlook.

For example, the September 2008 Greenbook makes for dismal reading about the state of the domestic and global economy. It predicts a "sharp deceleration" in economic activity in the domestic economy during the third quarter. Therefore, it suggests that the Federal Reserve Board tighten monetary policy until the middle of the following year.

Other publications of the Federal Reserve include the Blue Book, which outlines monetary policy alternatives that the FOMC can deliberate at the meeting, and the Beige Book. In 2010, the Greenbook and the Blue Book were combined into the Teal Book. Greenbook data is confidential and is made available to the public five years after the end of the year in which it is released. Archived versions of Greenbook are redacted because they contain sensitive information about the economy.

Bureau of Fiscal Service Green Book

The Green Book is designed to deal primarily with exceptions or issues unique to federal government operations, which contains federal agency contact information and website addresses where appropriate. Today, the vast majority of federal payments and collections are electronic. With few exceptions, federal government transactions are subject to the same rules as private industry ACH payments. The ACH regulation, 31 CFR 210, provides the basis for most of the information contained in the Green Book. However, there are other regulations that affect federal government ACH payments.

ACH is an electronic funds-transfer system run by the National Automated Clearing House Association (NACHA). This payment system deals with payroll, direct deposit, tax refunds, consumer bills, tax payments, and several more payment services. Federal regulations provide guidance for payment of goods and services with credit and debit cards and other electronic payment instruments.

The Green Book continues to get smaller in size and is designed to deal primarily with exceptions or issues unique to federal government operations. The government no longer prints or mails hard copies of the Green Book, but it is available at the Bureau of Fiscal Service website.

Automated enrollment (ENR) is a convenient method for financial institutions using the ACH network to transmit direct deposit enrollment information directly to federal agencies for benefit payments. An ENR entry is a non-dollar entry sent through the ACH by any receiving depository financial institution (RDFI) to a federal government agency participating in the ENR program. ENR is the enrollment method preferred by federal benefit agencies. The ENR reduces errors in the enrollment process and allows direct deposit payments to begin sooner than paper enrollment methods.

In addition to the ENR Option, financial institutions can also enroll for direct deposit via the Go Direct website. The Go Direct campaign was a national marketing and publicity campaign sponsored by the U.S. Treasury and the Federal Reserve that increased the use of direct deposit by federal benefit check recipients. The Go Direct campaign has officially ended, but financial institutions can still use the website for enrollment.

The Department of the Treasury Bureau of the Fiscal Service amended its regulations in 2017 governing the use of the ACH Network by federal agencies. The new regulation adopts, with some exceptions, the NACHA Operating Rules.

Treasury Department Green Book

The Treasury Department releases the "General Explanation of the Administration's Revenue Proposals" or the Green Book to accompany an administration's tax proposals contained in a budget. The book can be considered a wish list for fiscal policy since proposals contained in it are proposed legislation and have yet to be introduced and ratified by Congress. Publication of the Treasury Department's Green Book was stopped from 2017 to 2021 during the Trump Administration. The succeeding administration of President Biden resumed publication.

The Green Book's 2021 edition proposes a series of sweeping reforms to the current tax code. The reforms are meant to tackle inequality and homogenize tax regimes in a global manufacturing setup, where American companies have markets and a supply chain ecosystem that spans multiple jurisdictions.

As such, the Green Book’s tax proposals raise income tax on high net worth individuals and impose a minimum tax on earnings of global corporations. They also propose to cultivate a manufacturing base in America by making changes to international corporate tax rules. Some highlights of the Biden administration’s tax proposals are as follows:

  • An increase in the corporate tax rate for C corporations to 28% from the current 21% after Dec. 31, 2021.
  • A 15% minimum tax on certain large corporations with global supply chains, markets, and operation.
  • An increase in the top individual tax rate to 39.6% from the current 37%.
  • An increase in the long-term dividend rate and qualified dividend income rate to 39.6% from the current 20% for incomes that exceed $1 million, indexed for inflation. The proposal will be implemented retroactively for gains and income realized after April 28, 2021.
  • Transfers of appreciated property as gifts would be treated as a capital gains event at the time of sale and death. This proposal is subject to a $1 million lifetime exclusion.
  • Treating income from carried interest as ordinary income that is subject to self-employment tax.
  • Like-kind exchange gain deferrals under IRC Section 1031 will be limited to $500,000 for individuals and $1 million for joint filings.
  • Limitations on business losses or the losses from business activities over gains and threshold amount will be made permanent under the proposal.
  • Repealing the deduction for qualified business asset investment (QBAI) of controlled foreign corporation (CFC) to eliminate tax deductions for U.S. corporations to locate their assets overseas.

Article Sources

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  1. Federal Reserve. Federal Reserve Greenbook 2008. Accessed 1 Sep, 2021.

  2. Board of Governors of the Federal Reserve System. "Detailed Description of Documents Available." Accessed Nov. 30, 2020.

  3. U.S. Department of the Treasury. "Green Book: A Guide to Federal Government ACH Payments," Page II. Accessed Nov. 30, 2020.

  4. U.S. Department of the Treasury. "Green Book: A Guide to Federal Government ACH Payments," Page 1-4. Accessed Nov. 30, 2020.

  5. Federal Register. "Federal Government Participation in the Automated Clearing House." Accessed Nov. 30, 2020.

  6. Treasury Department. General Explanations of the Administration's Fiscal Year 2022 Revenue Proposals. Accessed 2 September, 2021.