Commissioner’s Memo COM-06-081, dated May 2, 2006, provided instructions for recording 40% Pullback Revenue. These instructions are for the purpose of complying with Arkansas code 6-20-401 and achieving uniformity in the way school districts report property tax revenue. Due to these instructions, some of the property tax revenue accounts previously used to report 40% Pullback on the cash basis are no longer necessary. All 40% Pullback will be recorded by June 30th. Therefore, the following revenue accounts are being removed from the Accounting Manual effective immediately:
11130...Property Taxes-40 Percent Pullback Received July 1- Dec 31
11135...Property Tax Relief Sales Tax – 40% Pullback Received July-
............December.
The descriptions of the following accounts are being changed to:
11120...Property Taxes – 40 Percent Pullback
11125...Property Tax Relief Sales Tax – 40 Percent Pullback
The following accounts are being changed to italics, and therefore, will not be required. These revenue amounts may be recorded in accounts 11110 or 11120, whichever is applicable.
11115...Property Tax Relief Sales Tax (May be charged to 11110
............Property Taxes – Current)
11125...Property Tax Relief Sales Tax-40 Percent Pullback (May be
............charged to 11120 - Property Taxes - 40%PB)
In response to some questions directed to APSCN since COM-06-081 was published, the following additional instructions are being given:
1. The law specifically defines the way 40% Pullback is calculated and makes no mention of deducting commissions. Therefore, the gross amount, as calculated by the Arkansas Department of Education and shown on the Certified Abstract of Assessments, should be recorded as 40% Pullback revenue.
2. If a district is accruing uncollected 40% Pullback at June 30th and does not know the amount that relates to Property Tax Relief Sales Tax, the entire accrual should be recorded in account “11120-Property Taxes – 40 Percent Pullback.”
3. Property taxes are collected in the year following property assessments. The 40% Pullback is tax revenue collected or accrued on assessments for the calendar year the school year began. Therefore the 40% Pullback revenue recorded for the 2005-2006 school year is based on the tax assessments for calendar year 2005, taxes payable in 2006.
4. If a school district collects more than the calculated 40% Pullback amount by June 30, the excess must be deferred to the following year. In the following year, this excess is no longer identified as 40% Pullback but becomes Current Property Taxes and should be coded to either revenue account 11110 or, if Property Tax Relief Sales Tax, revenue account 11115. Therefore, the last sentence of point 8 in COM-06-081 should be changed to the following:
“A journal entry should be made in Period 1 of the subsequent year that zeros out account 04815 and credits revenue accounts 11110 and 11115.”