WASHINGTON - Theft of government funds could be reduced if the Treasury Department monitored its lockbox arrangements with commercial banks better, according to a federal report issued this week.

The Treasury's Financial Management Service contracts with banks to collect income tax and other payments to the federal government. The banks establish post office boxes and electronic accounts to receive the payments, and eventually they transfer the funds to a Treasury account at the Federal Reserve Bank of New York. In fiscal 1999 banks collected about $288 billion for the federal government under this system.

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