Recommendation: Do not round each Tax Entity's Sales Tax amount separately. Round at the total Tax District level. This will allow for consistency in calculation with the state(s) and customer(s) and avoid manually adjusting invoices by a penny.

The state of California calculates sales tax as follows:
Tax District Sales Tax Rate 9.50% x Taxable Amount
[Represented by 7.25% CA + 2.25% Los Angeles]
$2,059.80 Taxable Amount x 9.50% Tax Rate = $195.681, rounds to $195.68 (Recommended)

Or, another way to look at this: 190 Tax District $2,059.80 Taxable Amount x .0725 (entity 790 CA) = $149.3355 + $2,059.80 Taxable Amount x .0225 (entity 600) = 46.35455. This totals $195.6810

Sage currently calculates Sales Tax as follows: Rounded for each Entity within the District (Current)
1. 2,059.80 x .0725 = 149.3355 rounded to 149.34
2. 2,059.80 x .0225 = 46.35455 rounded to 46.35
Sage's Total = $195.69

by: Traci K. | over a year ago | Accounts Receivable