Message from the ITA accounting firm regarding LITs
The accounting firm of C.L. Coonrod & Company has agreed to provide financial guidance & solutions to us related to shortfalls and temporary cash-flow issues on a weekly basis for the next several weeks.
Remember, Local Income Can Be Deposited Where It Is Needed
Local Income Tax (LIT) can be deposited into any fund. Most townships determine at the time of the annual budget how much LIT to allocate to each fund.
However, the trustee can change the allocation at any time. Unlike property tax, which has to be deposited into the fund for which it was levied, LIT can be deposited into any fund at any time.
If a fund is running short of cash, the trustee is empowered to begin depositing more LIT into that fund, and less into funds that don’t need it.
We don’t recommend changing past LIT deposits that have already been recorded. It is better to change the current month deposit and any future LIT deposits going forward.
Also, it may be proper to consult the township board. Generally, a board resolution is not required in order to re-allocate LIT among funds. However, consultation may be prudent.
Also, of course, it is important to make sure all funds receive enough revenue to cover their expected expenditures. Before shifting LIT, take great care that the fund receiving less LIT will still have enough cash to cover its expenditures for the year.