Inconsistency in Sales/Tax Reports

[lennys26]

I have raised this issue to Support who have not yet replied, so in the meantime I wanted to raise this issue to the community to see if anyone else has experienced a similar issue.

The problems are with the tax report available under Reports->Taxes. 

1. Looking at the "Taxable Item Sales" figure shown at the top of the page, I am noticing that this figure does NOT equal the sum of the "Taxable Amount" column. My understanding of the plain english text says that it should.
   
   
2. Looking one of the rows in my reports which is for a tax rate of 10%, the "Taxable Amount" is €4229.97, and the "Tax Collected" column shows €422.83. Clearly this is not a correct calculation (at 10%).

Has anyone else noticed discrepancies like this?

[TheRealChipA · Accepted solution]

Hey @lennys26. Hopefully we can get this resolved for you pretty quickly.

Item 1 - This is one that definitely seems like a bug.  If it is a bug, it’s not one I’m seeing so it is very possible that something is amiss in your account internals somewhere.  Hopefully support and the product team can track that down.  My reports are correct, and you are right when you say that the summary at the top should just be a restating of the detailed column totals below.

Item 2 - this is most like a rounding error that always occurs with sales taxes.  This happens because Square is required to calculate sales taxes at the transaction level to charge the customer the taxes.  Rouding errors of up to $0.01 (using your 10% example) can occur for each transaction, because taxes are calculated to whole cents and rounded up or down, accordingly.  The aggregate of all of those transaction taxes is what is reported in the “tax collected” column.  

In your example above, if that taxable amount contained only one transaction, then you would see no discrepancy.  If, however, the taxable amount represented 500 transactions, there would be 500 slight rounding errors that would add up over time, especially if most of them were either rounded up or down at the transaction level.  That is what you are seeing.

I hope that helps clarify part of your concerns.

[TheRealChipA · Accepted solution]

Hey @lennys26. Hopefully we can get this resolved for you pretty quickly.

Item 1 - This is one that definitely seems like a bug.  If it is a bug, it’s not one I’m seeing so it is very possible that something is amiss in your account internals somewhere.  Hopefully support and the product team can track that down.  My reports are correct, and you are right when you say that the summary at the top should just be a restating of the detailed column totals below.

Item 2 - this is most like a rounding error that always occurs with sales taxes.  This happens because Square is required to calculate sales taxes at the transaction level to charge the customer the taxes.  Rouding errors of up to $0.01 (using your 10% example) can occur for each transaction, because taxes are calculated to whole cents and rounded up or down, accordingly.  The aggregate of all of those transaction taxes is what is reported in the “tax collected” column.  

In your example above, if that taxable amount contained only one transaction, then you would see no discrepancy.  If, however, the taxable amount represented 500 transactions, there would be 500 slight rounding errors that would add up over time, especially if most of them were either rounded up or down at the transaction level.  That is what you are seeing.

I hope that helps clarify part of your concerns.

[lennys26]

Hi @TheRealChipA . Thanks for the reply.

1 - Thanks for the confirmation that you are not seeing the same issue on your end. It is odd and I hope that support will respond to my open case. One thing that has crossed my mind, although cannot say if it is a factor.... When creating items, it seems to be possible to not select any tax rate AND at the same time also NOT select the Non-Taxable Item option. I wonder if this is recognized by the system correctly. One would expect the system to automagically enable "Non-Taxable Item" when no other tax rate is selected, but this is not the case and, I have noticed that I have things configured in both ways.

2 - Rounding errors -- That is what I was thinking.

[TheRealChipA · Accepted solution]

@lennys26 You’re welcome.  Glad I could help a little.  Follow-up thoughts on your other observation.

First, yes it seems odd at first that an item could have NO taxes applied, yet not be flagged as non-taxable.  But I can see obscure cases where this could be possible in the short-term, especially as one is setting up a new account from scratch with Square.

Having said that, if you are like me and all of your items are subject to all applicable sales taxes in your location, your location sales tax settings can be set to ensure this now and in the future.  Just go to your online dashboard > Account & Settings > Business Information > Sales Taxes. For each sales tax, select/edit it.  In the field “Apply tax to” be sure it is set to “All current and future taxable items at selected locations.”

If there is a problem with one or a few items that aren’t being taxed properly, this should fix that going forward.  But, of course, that doesn’t help with your historical issue before that change.

Good luck.

[MichaelMPhoto]

While this explaination is valid, my tax calcutions are off by some 50%. A rounding error shouldn't end up being nearly half of what is collected versus what is ending up on the report. EG I have a sales tax rate of 6% on over 4k of taxable sales my report shows I've only collecte less than 33% ... 

Any explainations for this? 

[TheRealChipA]

@MichaelMPhoto No explanation without a lot more information.  The issue you are describing does not at all sounds like the initial issue reported in this thread.  In order to help troubleshoot your different problem (undercollection of sales taxes rather than a rounding error), we’d need to see specifics.  Like for the period in question, what were your taxable sales, what were the sales taxes calculated/collected, are you sure you’ve checked all of your items to ensure that they are set to charge sales taxes, discounts, etc.