How does TaxCloud handle rounding issues?

TaxCloud rounds at the 5th decimal, based upon Item and Quantity. Having said that, the states permit item-level rounding regardless of quantity, though TaxCloud does not do this (because we have quantity data).

For example:

Line item 1: Hat

Quantity: 1

Item Price: $10.00

Applicable rate: 0.07253333

TaxCloud rounded rate: 0.07253

TaxCloud resulting tax amount due: $0.73

 

Line item 1: Hat

Quantity: 2

Item Price: $10.00

Applicable rate: 0.07253333

TaxCloud rounded rate: 0.07253

TaxCloud resulting tax amount due: $1.46

However, with item rounding (ignoring quantity) the transaction with quantity 2 yields a slightly different result:

 

Line item 1: Hat

Quantity: 2

Total Price: $20.00

Applicable rate: 0.07253333

TaxCloud rounded rate: 0.07253

TaxCloud resulting tax amount due: $1.45

The states will accept either calculation methodology as valid, though (not surprisingly) they prefer item and quantity based calculations. As your analysis of SimpleSalesTax shows, they have a different methodology, but - again - it is ok as far as the states are concerned. They understand that there are different approaches and allow for rounding 'errors'.

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