Sales Tax — Rates, Sur-Tax, Liability vs Collected

JewelTrak computes sales tax per invoice based on three rate fields stored on the order: TaxRate, SurTaxRate, and SurTaxThreshold. Understanding how they combine is important for jurisdictions like Florida that have a base state rate and a discretionary county “sur-tax” capped at a threshold per item.

How tax is calculated

The base tax applies to the entire invoice subtotal. The surtax cap is applied per item, not per line and not per invoice:

base tax  = subtotal × TaxRate

per line: surtax = min(|lineExt|, qty × SurTaxThreshold) × SurTaxRate
          (algebraically equivalent to giving each item its own SurTaxThreshold cap)

total tax = base tax + Σ (surtax for each line)

• TaxRate — the base rate that applies to the entire subtotal (e.g. 6% state).
• SurTaxRate — an additional rate (e.g. 1% county discretionary).
• SurTaxThreshold — the dollar cap per item above which the SurTaxRate stops applying. Common in Florida ($5,000 cap).

Why per-item matters

A line of qty 3 at $3,000 each is three separate items for surtax purposes — each $3K item is under the $5K cap, so the full $9,000 line gets surtaxed:

3 × $3,000 watches in Florida (6% + 1%, $5,000 cap):
  base   = 9,000 × 0.06                 = $540
  surtax = min(9,000, 3 × 5,000) × 0.01 = $90    (full line under per-item cap)
  total                                 = $630

Contrast a single $8,000 item — only $5,000 of it gets surtaxed:

1 × $8,000 watch in Florida (6% + 1%, $5,000 cap):
  base   = 8,000 × 0.06                 = $480
  surtax = min(8,000, 1 × 5,000) × 0.01 = $50    (capped at one item × threshold)
  total                                 = $530

Service lines (StockType = ‘S’) are treated as a single item — the cap applies once to the line’s full amount.

Why this changed. Earlier versions capped surtax against the invoice subtotal as a whole, which under-collected on multi-quantity lines above the threshold. The math now matches the Florida DOR guidance (and equivalent rules in other surtax states): each item carries its own cap.

Rates are stored as decimals (0.06 = 6%) — the display layer converts to percentages.

Where the rates come from

Rates are per invoice, written at order creation time, copied from:

1. The store’s default rates (Settings → Stores → [store] → Tax setup), OR
2. The customer’s override (some out-of-state customers have their own tax setup).

You can edit the rates on an individual invoice if needed — the saved rate is what’s used for the calculation.

When tax is $0

A $0 tax line on an invoice means one of:

• Taxable = 0 on the order header — the customer is tax-exempt or the sale qualifies (out-of-state ship-to, resale certificate on file, etc.).
• Wholesale customer — the customer’s contact type is Wholesale or they’re a vendor; sales to wholesale don’t generally collect tax.
• TaxRate = 0 — the store has no rate configured (rare; usually a setup oversight).

The Sales Tax Liability report breaks invoices into three sections: Retail Taxable, Retail Non-Taxable, and Wholesale, so you can see which bucket a tax-free sale fell into.

Tax Liability vs Tax Collected

On the report, both columns usually show the same number — but they can diverge:

• Tax Liability = what the formula says you owe based on the invoice subtotals (the calculated amount).
• Tax Collected = what you actually charged the customer.

In the current model, these are equal — every invoice’s tax is the calculated value. The two columns exist for jurisdictions where you might collect a different amount (e.g. invoice-level tax overrides). If you don’t override, expect them to match.

$0 invoice filter

The Sales Tax Liability report has an Adjusted-to-$0 filter:

• Include (default): show invoices where line items existed but a 100% Adjustment netted them to $0.
• Exclude: hide those rows entirely. Useful when those comp invoices are noise in the report.

The dollar totals don’t change between Include and Exclude — by definition the excluded invoices contribute $0 to every money column. Only the invoice count changes.

Which invoice document you can print

Email, Share, Print and Download PDF each offer up to three versions of the invoice, and which ones appear depends on the order itself — because these are tax records, not layouts:

The order	Documents offered
Taxable (any type)	Standard only
Not taxable	Standard and Resale
Type is Retail Tax Exempt	Tax Exempt only

So a sale that charged tax can’t produce a resale certificate, and an exempt sale can’t be papered over with an ordinary invoice. When only one version applies — the common case for a taxable retail sale — the button just prints it, with no menu to choose from.

If you tick Taxable on a Retail Tax Exempt order the buttons switch off, because that combination contradicts itself. Clear Taxable, or change the Type, and they come back.

Tips

• File the Sales Tax Liability report monthly with your state’s sales tax return.
• The Tax Collected total should match what you remit to the state (down to the rounding rules — JewelTrak rounds per-line at 2 decimals).
• For a customer who claims tax-exempt status, mark Taxable = 0 on the invoice and record their resale-certificate number on the contact record so the verification + audit trail lives in JewelTrak. See Resale Certificates for the capture + verify workflow.
• If you ship to multiple states, set up a per-customer rate override or use the customer’s default address to drive the rate.