If the city keeps court costs in an interest-bearing account, what determines whether the city may retain the interest?

• A. The city may keep the interest if it reports timely.
• B. The city may keep the interest regardless of reporting.
• C. The city must remit the interest to the State.
• D. The interest is deposited to a State fund.

Answer: (A)

Timeliness of reporting determines who is allowed to keep the interest. When the city reports promptly about the interest earned on court costs held in an interest-bearing account, it may retain that interest. The reason is that prompt reporting shows proper handling and accounting of the funds, satisfying the regulatory requirement that governs who may benefit from the earned interest.

If reporting isn’t timely, the interest typically should be remitted to the state or deposited into a state fund, rather than kept locally. That’s why statements that the city may keep the interest regardless of reporting or that all interest must go to the state are not correct — they ignore the conditional rule based on timely reporting.