Tax Calculation and Reporting
- Nicholas Cook
- Daniel Gowen
This article explains how taxes are calculated and reported
How Taxes are Calculated
Taxes are calculated on each line item as you ring them up based on the Net Amount (This is the amount after any discounts).
The tax used will be the most specific tax(es) tied to the product. The priority of the taxes applied is done in the following order.
Manually Overridden Taxes on a Product
Customer Exempt Certificates
Product Tax Overrides
Location Tax
If there are multiple taxes being applied to a product, each tax will be calculated on each product line, and then rounded, and the sum of those taxes will then get summed up for the total tax on that line.
The sum of each tax from each line is then summed together to get the total tax for on the sale.
If you have “Print Tax Breakdown” enabled under Global Settings & Configuration → Locations → Manage Location → Receipts → Print Receipts, then each individual tax will be shown, else they will be shown as a single tax line.
How to Report on Taxed Collected
The End of Day or End of Period gives a quick easy way to see what your total tax liability is along with how much was collected. These reports show you how much was collected, so depending on your state and your accountant, you might use the value of what was collected, or you might need to recalculate the total due based on your sales. To do this, tax the Net Sales amount, and multiply it by your tax percentage.
Tax Summary: This report will give you a printable version of your Tax Summary section.
Tax Summary (xls): This report gives you the same Tax Summary in an excel format on the first worksheet, plus a second Details worksheet that will show each individual product/tax combination that was collected within the period the report was run for.
Discrepancy? As taxes are calculated and collected on each line item of each invoice, the total amount of taxes collected will vary from the amount that you would calculate if you take an aggregated total for the month and recalculate the sales tax collected. This is due to the rounding of fractional amounts during the individual sales transaction. ex. An item that is $139.95 with 6% sales tax would yield a sales tax amount of $8.3970, rounded to $8.40. When applied to 1000 monthly transactions, the resulting variance would be $3.00.
What if I have Astro Enabled.
If you have Astro’s Frequent Buyer enabled, there are a couple of caveats to how you need to calculate your taxes.
When you give a customer a free bag of food, you are actually getting reimbursed for that discount. Because of this, you still need to collect Sales Tax from your customers on the pre-discounted amount. On any tax report, you will see these records show up using the tax name + “Reimbursed Discount” post pended to the name. For these records, you will be liable for the taxes based on the Gross Sales amount instead of the Net Sales amount.
If you need to recalculate your total tax liability based on total sales instead of what was collected, you will need to add the Net amount from your sales tax lines, and then add the Gross Sales amount from the Sales Tax Lines marked as Reimbursed Discount before multiplying the total against your tax rate.
Why are Bonus Bucks a payment and have taxes charged on them.
Bonus Bucks are a Credit or Gift Card that you are giving a customer for usage toward a future purchase. Because of how tax laws are written, bonus bucks are generally considered as a gift card, and therefore taxes need to be collected when they are redeemed.
Tax laws often conflict with each other. Collecting tax on bonus bucks is recommended but we encourage you to check with a tax accountant in your state. Bonus Bucks may be configured so that sales tax is not collected. When you set up Bonus Bucks as an extended action, sales tax will not be applied. When structured as an extended action, Bonus Bucks will display as a product with a negative price on the invoice.
Links for individual states and their laws.
State Guides for reporting on Bonus Bucks and Similar Programs