Tax Revenue Policy  

Authority:
GASB Codification 1800.115 and N50.113

Effective Date:
7/1/2006

References:
See NCAS Chart of Accounts

Policy:
Taxes are compulsory charges levied by the government to finance services performed for the common benefit. Taxpayer-assessed taxes require the taxpayer to initially determine the amount of taxes due and to prepare a tax return. GASB-33 requires revenue from taxpayer-assessed taxes to be recognized net of estimated refunds in the accounting period when the underlying exchange occurred. When modified accrual accounting is used, resources also should be "available", that is, they should be both measurable and available to finance expenditures of the fiscal period. Judgment, materiality and consistency should be taken into consideration when applying the "availability" criteria.

GAAP requires revenues to be classified by fund and source. Revenues designated for a specific purpose are recorded in the fund where the expenditures they support are incurred. Certain tax laws require portions of a tax to be credited to a designated fund for a specific purpose. In these situations, the designated fund will record the tax proceeds to a tax revenue account. The fund responsible for recording the gross tax collections will record the amount credited to the designated fund to a contra revenue account. These transactions are not operating transfers.