Accrued Property Taxes
The accounting term used to describe the recording of taxes that are owed to state, county, or municipal authorities, but not yet paid, is accrued property taxes. Recording expenses when they are incurred, and revenues when they are generated, is known as the matching principle.
Accrued property taxes are recorded on the balance sheet as a current liability since these obligations are usually payable in less than 12 months. Accruing taxes adjusts for the timing between the creation of the liability, and the payment of the tax to governing bodies.