We recently began collecting a service charge on credit card payments on March 5th and I have run into a few odd things.
We collect two different types of Sales Tax. For food items we collect 2.50%, for everything else that is taxable, we collect 9%.
I noticed recently that Square was collecting the food sales tax even when no food items were sold. This seemed to be directly linked to sales that had the credit card processing fee automatically applied. I double checked each of the items sold that day and within their individual item pages none of them had the food sales tax applied. I also noticed it sporadically collecting sales tax on credit card payments for a fundraiser item which we pay sales tax on, but typically consider the tax inclusive of the price the customer pays.
Both sales tax categories were attached to the automatic credit card processing fee at the time. Is this the reason it is collecting both taxes even when the item does not have that tax applied to it? I've taken both taxes off the processing fee for now in hopes of correcting this issue.
We're new the collecting the processing fee so, any guidance on how to collect the processing fee without automatically collecting incorrect sales tax amounts is appreciated.
