A government that uses a fund to hold and manage taxes assessed on behalf of other jurisdictions operates which type of fund?

A government that uses a fund to hold and manage taxes assessed on behalf of other jurisdictions operates an Agency Fund. Agency Funds are specifically designed to account for resources that the government holds temporarily for others, meaning the government acts as an agent. In this scenario, when taxes are assessed and collected on behalf of other jurisdictions (like municipalities or school districts), the government essentially collects and manages these resources without having ownership of them. This distinguishes Agency Funds from other types of funds, as they do not involve the government using the funds for its own operations or to generate revenues.

In contrast, the General Fund is used for the regular operations of the government itself, and Special Revenue Funds are designated for specific revenue sources that are restricted to particular purposes. An Investment Trust Fund is typically used to manage investments that are held in a trustee capacity for other entities. Thus, an Agency Fund is the correct designation for the fund managing taxes on behalf of other jurisdictions.