The collection of assessment tax is becoming more challenging to the local government in Malaysia. Many local governments face the issue of assessment tax arrears due to several factors either it is within their control or beyond their control. In Malaysia, the problem of tax arrears is becoming an issue in many local governments since it can give a result to the critical level of revenue collection performance. According to the Collection of property tax revenue statistics generally show the majority of Malaysian local authorities collect property tax of less than 70% of the total taxable amount, while for the collection of property tax arrears show only within 30%-50% (Pawi, S. et al, 2011). The current account of most local authorities has been always in deficit, due to the outstanding arrears in assessment (Kuppusamy, S., 2000). The deficit can be described as the financial performance of an organization that is unfavorable. It means that the expenditure is more than revenue (Nafsiah Mohamed & Ruhaya Atan (2010). Therefore, this paper represents a review of the Malaysian local government assessment tax arrears where the highlight is on three determinants which are adopted and adapted from the Fishers tax compliance model. The determinants that lead to assessment tax arrears are the attitude of the taxpayers, knowledge of the taxpayer and the tax system. It was hypothesized that a positive relationship would exist between these variables and tax compliance behavior. The result reveals that these three factors are accepted as the contributing factors on tax compliance behavior. The attitude of the taxpayers is seen as the main factor of assessment tax arrears.
