Sales Tax Rounding Issue

[aubreyd]

I know from searching through prior forum threads that sales tax rounding is an issue that has raised it's head from time to time over the last dozen or so years. Sadly, it seems to still be an issue.

We are seeing these .01 errors rather frequently. While that may seem to be a small amount of money to be concerned with, when multiplied out, it becomes a big issue that has to be dealt with in order to make the gov't revenue departments happy on both the state and federal level.

Our accounting software has a setting which allows you to choose whether to round up or down. In keeping with standard accounting practices, we choose to round up. Miva apparently has chosen to round down and doesn't offer the store owner the option of choosing an alternative.

Here is an example of an order that was affected:

Sub Total:	420.00
Shipping: Free Ship [Over $150]:	0.00
New Store Sale Discount:	-22.50
Sales Tax:	27.82
Total:	$425.32

The taxable amount is $397.50
7% state sales tax $27.825

The tax amount should be rounding to $27.83


Thoughts? Ideas? Prior solutions that I may have missed when I perused previous threads?

[Rick Wilson]

Re: Sales Tax Rounding Issue

Miva apparently has chosen to round down and doesn't offer the store owner the option of choosing an alternative.

This isn't exactly true. Miva follows Bankers Rounding (which from what we understand is what should be followed legally).

A tie-breaking rule that is less biased is round half to even, namely:

• If the fraction of y is 0.5, then q is the even integer nearest to y.

Thus, for example, +23.5 becomes +24, as does +24.5; while −23.5 becomes −24, as does −24.5.
This method treats positive and negative values symmetrically, and is therefore free of sign bias. More importantly, for reasonable distributions of y values, the expected (average) value of the rounded numbers is the same as that of the original numbers. However, this rule will introduce a towards-zero bias when y − 0.5 is even, and a towards-infinity bias for when it is odd.
This variant of the round-to-nearest method is also called unbiased rounding, convergent rounding, statistician's rounding, Dutch rounding, Gaussian rounding, odd-even rounding,^[4] bankers' rounding, broken rounding, or DDR rounding and is widely used in bookkeeping.
This is the default rounding mode used in IEEE 754 computing functions and operators.

More info can be found here: http://en.wikipedia.org/wiki/Roundin...d_half_to_even

[ILoveHostasaurus]

Re: Sales Tax Rounding Issue

Merchant currently uses the round half to even method of rounding, also called "Bankers Rounding." I assume your state uses the round up method based on the third decimal place? I will inquire about that with our CTO.

[ILoveHostasaurus]

Re: Sales Tax Rounding Issue

It appears that most states have adopted a policy stating sales tax should be calculated against either the line items or the total, to three decimal places, and then rounding the second decimal place (cents) up if the third decimal place is greater than four. Our CTO has filed this as a bug and it will be fixed in an update to be released after the version 9 major release.

[kayakbabe]

Please please please don't just change it.. make a feature so the store owner can choose what type of rounding.
Our CFO and CEO will have a fit if pennies don't match when orders are imported into SAGE MAS200.
And the change will cost us a lot of money, those SAGE outsourcing contractors are not cheap!

[Jim McCormick]

Please please please don't just change it.. make a feature so the store owner can choose what type of rounding.
Our CFO and CEO will have a fit if pennies don't match when orders are imported into SAGE MAS200.
And the change will cost us a lot of money, those SAGE outsourcing contractors are not cheap!

This is an old thread and I believe what you're looking for has already been added in the v9 release David mentioned. Go into Store Settings -> Store Details and scroll all the way to the bottom where the tax options are configured. There is a 'Rounding Method' setting with a drop down to choose Banker's Rounding or Round Up.

[kayakbabe]

***melodramatic breath of relief*** OH THANK YOU!

[kayakbabe]

It appears that Shopper Selected Sales Tax doesn't respect the rounding method setting.