In recording property taxes, there is a difference as to when a receivable is recorded for property tax revenue and when the related revenue is recognized. A receivable should be recorded on the balance sheet for property tax receivables (net of estimated uncollectible property taxes receivable) on the date that the property taxes are levied. To the extent that property taxes receivable exceed the amount of revenue that may be recognized under the “available” criterion, the difference should be recorded as deferred revenue.

Accordingly, revenue should only be recognized for the amount of the property taxes receivable amount on the balance sheet at the end of the fiscal year for the amounts of the property tax receivable that were collected sixty days after the balance sheet date. The difference between the property tax receivable at the fiscal year-end and the amount recognized as property tax revenue should be recorded as deferred property tax revenue. In the government-wide financial statements, even property tax revenues collected after the sixty-day period are recognized as revenues. The availability criteria do not apply to the accrual basis of accounting used in the government-wide financial statements.

In addition, when property taxes are collected in advance of the year for which they are levied, the advance collections should be recorded as deferred revenue. These advance collections should not be recognized as revenue until the period for which they were levied is reached.

Taken From : Governmental Accounting Made Easy

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