The Healthcare Financial Management Association's Principles and Practices Board has issued accounting guidelines for tax-exempt healthcare providers that pay assessments or make payments in lieu of taxes.
The guidelines address payments for governmental services, such as sanitation services, fire protection, funding of charity pools and payments for "general governmental support expenses."
The board said the accounting for governmental services payments depends on whether there is a specifically identified tax.
If all entities pay a tax regardless of tax status, the payment is recorded as an operating expense. For example, the board said all entities pay a telephone excise tax regardless of tax status and record it as part of their telephone expense.
If only tax-exempt entities pay a tax, it's recorded as a general governmental support expense.
Accounting for healthcare services provided in exchange for governmental services is based on the fair market values of the services involved. If a healthcare provider renders services in lieu of a tax or fee, the services should be recorded as revenue and general governmental support expense.
Accounting for payments into a charity pool depends on whether there is a guarantee that any of the funds will be recovered. If such a guarantee is provided, the recoverable amount is recorded as a receivable. If there is no guarantee, the payment is recorded as a general governmental support expense.