Tax Rounding - (Hijacked the Bug Thread)

[Tom]

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[Bruce - PhosphorMedia]

1) While I personally am for a unified set of taxing rules for the internet, this "project" is not "tax" law...

2) Just because an accounting method is "old" in now way implies its obsolete or archaic.

[Tom]

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[Bruce - PhosphorMedia]

Actually the appropriate modification that Miva should consider is to provide the option of rounding methods. The rounding method is far from universal (remember there are other countries besides the US).

BTW: I asked our CPA about this issue...and he just laughed...no state is going to care until you are looking at TAX revenues in the hundreds of thousands...so yea, Boeing better get it right...but the average Merchant Store owner...nah.

[Vic - WolfPaw Computers]

Actually the appropriate modification that Miva should consider is to provide the option of rounding methods. The rounding method is far from universal (remember there are other countries besides the US).

BTW: I asked our CPA about this issue...and he just laughed...no state is going to care until you are looking at TAX revenues in the hundreds of thousands...so yea, Boeing better get it right...but the average Merchant Store owner...nah.

That is your CPA's advice. Frankly, I dont consider that to be very sound advice. Tax rounding has always been to the mill (or milli .00x) So you're CPA may be right due to the circumstance of being small potatos in the grand scheme of things...The IRS or State Comptroller just might decide they want to crack down on those lost tenths of a cent. After all, as a small business, its insignificant, but statewide or nationally - crack down and that could net millions in additional tax revenues.

Some states are getting pretty hungry!

[aGorilla]

The IRS or State Comptroller just might decide they want to crack down on those lost tenths of a cent. After all, as a small business, its insignificant, but statewide or nationally - crack down and that could net millions in additional tax revenues.

Some states are getting pretty hungry!
It's not significant nationally, because we don't have a national sales tax. Even on the state level, this is per transaction (order), not per item, or per dollar.

So now we're down to a subset of sales that are made in-state, and using Miva Merchant.

To take it further, you're down to the subset of the above, where the third decimal place is a 5. On average, this should be one out of every ten transactions. Of course, depending on your pricing, your average order total, and your sales tax rate, this could happen more often than one in ten.

When this 'perfect storm' occurs, the state loses a half a penny on that transaction.

So if you have a store that nets $1,000,000 with an average order of $40, that's 25,000 transactions. How many of those are in-state? How many of those end with .xx5? Even if it were all of them, the lost tax revenue would be $125.00.

Any state comptroller that believes it would be an efficient use of manpower to find, and collect, that missing $125, is probably a large part of the reason that the state is getting hungry.

my $.005