Some systems have a rounding option and some do not. It’s important to understand how your system handles rounding in conjunction with CereTax.
In CereTax, the rates are shown to 6 digits to accommodate the various state rates. By default, calculation to 4 digits happens first, then the total is rounded. This way, the tax calculation stays consistent with what the tax total should be when tax is calculated on the invoice subtotal.
Using an invoice example with 3 items and a sales tax rate of 6.25%, the total tax calculated on the subtotal is $5.62.
When the tax is broken down by line item, calculated to 4 decimal places, the tax amount would be rounded to$5.62.
Even if the calculated tax is displayed at 2 decimal places, the total of the tax will still equal $5.62 because of the underlying calculation to 4 digits (that is not displayed), totaling of the tax amounts, then rounding.
If only the values (for example, $3.13) without underlying rounding data to 4 decimal places were used, then tax amounts totaled, the tax would equal $5.63. Because the overall tax calculation for the invoice total of $89.99 at a rate of 6.25% is $5.62, a tax calculation of $5.63 would be incorrect.
