For my new shop, I did my state sales tax filing this weekend for my first month in business, and although I got through it, it threw me for a loop. (States don’t seem to want to give you all the information you need up front, but make you dig for it.)
I’m in Virginia, and I knew that our sales tax rate was 4.3%. I also knew that the local tax for Loudoun County was 1.7%, so I configured my shop to collect that on all Loudoun County, Virginia sales. (To be precise, the county tax is 1% and there is a regional transportation tax of 0.7%.) I got one order last month, so the problem I’m going to describe didn’t have a huge impact. But I need to fix it before my sales increase, also increasing the scope of the problem. (I over-collected by 2 cents.)
It was only in the online tax filing that they revealed a 1.116% dealer discount (for sales under a certain amount, which I qualify for right now). Based on the state’s computation, I can tell that the discount is applied to the resulting tax, not to the taxable sales.
To summarize using a $100 sale example:
$100.00 - Taxable sales
$4.30 - State 4.3%
$1.70 - county&transport tax 1.7%
$6.00 - total tax
-$0.05 - minus the dealer discount 1.115%
$5.95 - total tax owed
Got it? It’s not that hard, but my shopping platform only allows me to create tax exceptions with positive numbers. I can’t enter a negative percentage or discount. I fiddled with a calculator to see if I could somehow combine the tax rates with the discount rate to end up with the correct amount of taxes collected, but couldn’t figure it out. So asking for help here. How do I:
4.3% + 1.7% - 1.116% and using the example above end up with that 5 cent discount? It doesn’t seem to be as easy as 4.3% + .584%. It can’t be this hard, but I’m missing something.