Year-End Entries for Taxes Receivable Andrew Lacasse, CPA Regional Director West Virginia State Auditor’s Office Chief Inspector Division andrew.lacasse@wvsao.gov

Year-End Entries for Taxes Receivable Assessor and Sheriff’s Office Duties Documents Needed for Year End Entries Sheriff’s Settlement Period of Availability Monthly Tax Collection Report Property Tax Year-End Entries

Assessor and Sheriff’s Office Duties 8100.2 – Handbook for School Finance in West Virginia Local taxes are levied on the assessed values of real and personal properties and public utility properties. The county assessor establishes the value of all non-public utility properties and the Department of Tax and Revenue establishes the assessed value of public utility properties. The state constitution permits the county board to impose, up to specified limits, an ad valorem tax on real and personal property including public utility property within the county.

Sheriff’s Office Duties Based on the calculations performed by the assessor, the Sheriff shall distribute taxes to the levying bodies. West Virginia Code §6-8-1 requires each public officer to make a settlement of all funds received by him within thirty days of June 30th of each year. West Virginia Code §6-8-5 requires each sheriff to make a settlement within thirty days after leaving office. West Virginia Code §6-9-5 requires the State Auditor to prescribe the sheriff's settlement format.

Property Tax Year End Entries Documents Needed Sheriff’s Settlement for fiscal year end June 30, 2017 Levy Order and Rate Sheet for the Fiscal Year To determine the allowance percentage you will need: Levy Order and Rate Sheets for the past 5 fiscal years. Sheriff’s settlements for the past 5 fiscal years.

Property Tax Year End Entries Documents Needed (Continued) Monthly Tax Collection Report and/or Cash Distribution Recap for taxes collected by the Sheriff’s Office in June 2017 (BOE normally receives July 2017) Monthly Tax Collection Report and/or Cash Distribution Recap for taxes collected by the Sheriff’s Office in July 2017 (If period of availability is 60 Days). (BOE normally receives August 2017)

Sheriff's Settlement New Line No. for FY 2017 and beyond Line No. 16 – Legal Fees and Costs Amount of legal fees owed to general county from other funds/taxing entities §7-5-24

Sheriff's Settlement Line 11 – Ending Taxes Receivable Line No. 11 – Taxes receivable as of the end of the settlement period. This line No. may not represent the taxes receivable that the County BOE will record.

Sheriff's Settlement Line No. 42 – Ending Balance This line item represents what is still owed to the taxing unit. Certain Counties will issue property tax checks on June 30th and include the check amount in Line 34 “Orders Issued” thus leaving a Zero Balance in Line No. 42. Although the Sheriff’s Settlement records the June 30th check as distributed, the County BOE has not yet received the funds. When this occurs, property taxes receivable recorded by the BOE should equal Line No. 11 PLUS the amount received in July (Obtained from the monthly collection report).

Sheriff's Settlement Line No. 42 – Ending Balance Certain Counties will issue June Tax Collection checks in July. In these cases, the ending balance on line no. 42 should equal the amount that will be distributed to the taxing unit and Line No. 42 PLUS Line No. 11 will equal property taxes receivable.

30 Day Vs. 60 Day Period of Availability The Sheriff's Settlement is completed as of June 30th. Therefore, the Sheriff's Settlement will not include tax collections received in July on Line No. 33. If the taxing unit uses a 60 day period of availability, then, when calculating deferred inflows, the taxing unit should include property taxes received in August (July collections from Sheriff’s Office), for taxes that were due to the taxing unit in fiscal year 2017 or prior. Only certain taxes collected by the Sheriff’s office in July 2017 will be for taxes due for the 2017 fiscal year. Most of the taxes collected in that month are related to taxes due in the subsequent year.

Unavailable Tax – Deferred Taxes To be recognized as revenue under the modified accrual basis of accounting, which is used in the governmental funds, payment must be received during the year or soon enough thereafter to be “available” to finance current-period expenditures. If a portion of a government’s property tax levy is not expected to be collected until more than 60 days (some entities may choose to use less than 60 days), then that tax is not considered available.

Unavailable Tax Revenues – Deferred Taxes Examples of Deferred Inflows recognized at year-end: Property Taxes Food Service Collections E-Rate Medicaid Federal Reimbursements / Grant Drawdowns

Property Tax Year End Adjusting Entries Example Using the Sheriff’s Settlement, Monthly Tax Collection, Levy Order, and Cash Distribution Recap handouts, complete Property Tax Year End Entries.