Regulation CC §229.10(c)(iv):
(c) Certain check deposits--
(1) General rule. A depositary bank shall make funds deposited in an account by check available for withdrawal not later than the business day after the banking day on which the funds are deposited, in the case of--
* * * *
(iv) A check drawn by a state or a unit of general local government and deposited--
(A) In an account held by a payee of the check;
(B) In a depositary bank located in the state that issued the check, or the same state as the unit of general local government that issued the check;
(C) In person to an employee of the depositary bank; and
(D) With a special deposit slip or deposit envelope, if such slip or envelope is required by the depositary bank under paragraph (c)(3) of this section.
If the transaction meets all four criteria, the check gets next-day availability. Case-by-case holds aren't available. If the check is large enough, you could use a large-deposit hold on the excess over $5525. In my experience, the check is probably not large enough for that.
If your bank requires the use of a special deposit ticket and the customer failed to use one, you could treat the check like any other check, ignoring that it's issued by a local municipality.
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