CoreBridge uses the concept of Tax Groups, which allows you to group multiple Tax Agencies while charging one sales tax rate.
CoreBridge calculates each sales tax rate individually, then rounds off each individual total before adding them together to give the total sales tax that is charged. This is necessary to maintain proper accounting at the Tax Agency level.
Computation in CoreBridge and the eCommerce module must be done individually by Tax Agency, not using the group total. A fictitious example will illustrate why.
The Kudzo Metropolitan area is subject to the following taxes:
- State Tax at 2.75%
- City Tax at 2.75%
- Special Fire Tax at 2.75%
A tax group called "Kudzo Metro" is created with these 3 tax agencies. The combined tax rate is 8.25%.
For an order that costs $50.25, the combined tax rate yields $4.14563, or $4.15 when rounded to two decimal places.
However, each tax municipality must be paid individually. When you calculate the amount due to each tax agency, you obtain an individual tax rate of $1.38188, or $1.38 when rounded. The sum of all of the taxes done this way is then $4.14, not $4.15
For this reason, CoreBridge (and QuickBooks and most accounting software) use the second approach to rounding taxes. This is required for compatibility with QuickBooks, but makes sense once you understand why.
The separate calculations for each Tax Agency are done by CoreBridge so that the amounts for the individual sales tax items are calculated correctly for your sales tax liability report and your sales tax payments. If you are calculating sales tax by only looking at the total amounts, you may occasionally get a rounding difference between the two calculations. Consider combining your multiple Tax Agencies into a single agency with the total rate, therefore avoiding the multiple Tax Agency calculation altogether.
NOTE: This option may not be possible depending on how you are required to report your sales tax liability.