Why is my Tennessee transaction taxing different than expected?
Overview
My Tennessee transaction is not calculating the way I expected and need to know why.
Environment
Avalara Avatax
Resolution
Check to make sure that the Tennessee Single Item Tiered Tax isn't coming into play:
AvaTax handles the Tennessee single article tax as follows. Three calculations are made when calculating sales tax in Tennessee: 1) State tax, 2) Local tax and 3) Single article tax
State tax rate of 7% is applicable to all amounts.
Local tax rate between 2.25% and 2.75% is applicable between $0-$1600 for all items. (This rate is dependent on the local city or county rate.)
State single article tax rate of .0275% is applicable for all single items between $1600-$3200.
Example: Single item sold for $4000 to Nashville
State tax: $4000 x .07 = $280
Local tax: $1600 x .0225 = $36
Single Article tax: $1600 x .0275 = $44
Total tax: $360
Example: Two items sold for $2000 each to Nashville
State tax: 2 * ($2000 x .07) = $280
Local tax: 2 * ($1600 x .0225) = $72
Single Article tax: 2 * ($400 x .0275) = $22
Total tax: $374