Custodial Fund - Remittance of Collected Taxes to Other Taxing Bodies
Recording the remittance of property taxes held in the custodial fund to their respective taxing bodies (school district, city, fire district, library district).
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Custodial Liability - Taxes Held for School District | Liability (-) Custodial | 7,200,000.00 | - |
| Custodial Liability - Taxes Held for City | Liability (-) Custodial | 2,150,000.00 | - |
| Custodial Liability - Taxes Held for Fire District | Liability (-) Custodial | 485,000.00 | - |
| Cash - Custodial Fund | Asset (-) Custodial | - | 9,835,000.00 |
💡 Accountant's Note
Upon remittance, the county's custodial fund liability decreases and cash is disbursed to the respective taxing bodies. Each taxing body records the receipt as property tax revenue in its own fund accounting system. The county's custodial fund has no income statement — only additions and deductions to/from custodial assets (shown in the Statement of Changes in Fiduciary Net Position for custodial funds per GASB 84).
Practitioner & Systems Framework
💻 ERP Architecture
Wire transfers to each taxing body should be traceable to the specific tax levy period and taxing body. Generate remittance advices for each taxing body showing the breakdown of the payment by levy type and property tax year. Some states require remittance of interest earned on tax collections to the respective taxing bodies.
⚠️ Audit Flags
Auditors reconcile remittances to collection records and confirm amounts with recipient taxing bodies (inter-entity confirmation). Interest earned on tax collections while held in the custodial fund must be allocated and remitted per state law — retention of this interest by the county is a common finding.
📄 Required Documentation
Remittance calculation by taxing body and levy year, wire transfer confirmations, remittance advices sent to each taxing body, interest calculation on held balances, state law compliance for interest remittance, confirmations from recipient taxing bodies.
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