Sales Tax Revenue - Accrual Under Modified Accrual (60-Day Rule)
Accruing sales tax revenue collected by the state and remitted to the local government, recognizing only the portion expected to be received within 60 days of fiscal year-end under the availability criterion.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Sales Tax Receivable - State Remittance | Asset (+) | 620,000.00 | - |
| Deferred Inflows - Sales Tax (Beyond 60 Days) | Deferred Inflow (+) | - | 85,000.00 |
| Sales Tax Revenue | Revenue (+) | - | 535,000.00 |
💡 Accountant's Note
Sales taxes are often collected by the state and remitted to local governments with a 1–2 month lag. Under modified accrual, the local government recognizes revenue only for sales tax remittances expected within 60 days of fiscal year-end. For example, June sales tax may not be remitted by the state until August — beyond the 60-day window — and is deferred. This creates a recurring year-end accrual/deferral analysis that surprises accountants new to government finance.
Practitioner & Systems Framework
💻 ERP Architecture
Analyze the state's remittance schedule to determine which months' sales tax will be received within the 60-day window. This analysis must be performed consistently each year. Changes in the state's remittance schedule can materially impact reported revenue.
⚠️ Audit Flags
Auditors confirm the 60-day analysis against actual subsequent receipts. Sales tax is a significant revenue source for many local governments — errors in the availability analysis materially misstate revenues. Confirm the remittance amount with the state revenue department.
📄 Required Documentation
State sales tax remittance schedule and amounts by month, 60-day availability analysis, historical remittance pattern, state notification of remittance amounts, deferred inflows roll-forward.
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