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Why does the calculation based on the rate and amount seem incorrect?

Overview

When I calculate tax in the Basic Tax Calculator, Advanced Tax Calculator, a Sales order, or Sales Invoice  and receive a value and rate, I get a different value then when I calculate the amount by the rate in my regular calculator.

Environment

Avalara AvaTax

Resolution

  • The Basic Tax calculator follows all of the rules of the state
    • Check to make sure that the state has the rounding level that you expect
    • Make sure that you calculate based off of each jurisdictions, in appropriate states
  • Rounded amounts could also cause a difference
    • The AvaTax service supports two decimal places only. However, some states have rates that go past the two decimal places
    • When this happens, the AvaTax service will apply the extended tax rate and then round the calculation to two decimal places
    • AvaTax also does not apply a flat rate to the lines, it applies each jurisdictions' individual rate, then totals all calculations.
      • Examples: Document Level rounding
        • 175.5 * 0.0625 = 10.96875   (CA State rate)
          175.5 * .0025 = 0.43875   (CA County Rate)
          175.5 * 0.015 = 2.6325   (CA STJ Rate)
          175.5 * 0.01 = 1.755   (CA STJ Rate)
      • Line level rounding
        • 175.5 * 0.0625 = 10.97
          175.5 * .0025 = 0.44
          175.5 * 0.015 = 2.63
          175.5 * 0.01 = 1.76
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