DISHONORED CHECKS - 8043
Dishonored checks are items deposited at a depository bank but are returned either:
- Due to insufficient funds in the accounts the checks are drawn.
- For other reasons that prevent the bank from honoring the checks.
Depository banks attempt to deposit checks twice before being considered dishonored.
The depository bank will notify the agency/department when a check is dishonored. Within ten business days from receipt of the notification, the agency/department shall issue a check, payable to the depository bank, on the account into which the deposit was made. This check will reimburse the depository bank affected by the return of the dishonored check.
If the agency/department has been notified by the depository bank that counterfeit checks have been received, the agency/department will follow the above buyback procedure and notify the California Highway Patrol.
Agencies/Departments shall track and maintain a monthly count of dishonored checks reimbursed to the depository banks. If deposits are made into more than one depository bank, agencies/departments should maintain a separate dishonored check count worksheet for each bank. The State Treasurer’s Office (STO) has created a worksheet that agencies/departments can use to track dishonored check data. To request this worksheet, e-mail Checks@treasurer.ca.gov.
The STO uses the total count of dishonored checks by centralized State Treasury System (CTS) account to compensate the depository banks for handling these items. To ensure the depository banks are accurately compensated, agencies/departments shall report the following to the STO:
- Non-Pre/Miscellaneous sorting check agencies/departments - the total number of dishonored checks reimbursed for the previous fiscal year by the last business day of July to: http://www.treasurer.ca.gov/dishonoredchecks/.
- Pre/Miscellaneous Sort Deposit agencies/departments - the total number of dishonored checks reimbursed by the 15th of each month by e-mail to Checks@treasurer.ca.gov.
Agencies/Departments shall endorse checks with identifiable information as a means for depositories to return dishonored checks. For endorsement instructions, see SAM Sections 8034.1 through 8034.5.
Dishonored checks relating to deposits in banks outside the CTS will be returned in accordance with usual commercial practices. The bank will debit the account of the depositing agency/department.