Is there a way to make a coupon not affected by sales tax?

[wildberries]

Is there a way to make a COUPON not affected by sales tax? Legally, I believe, if an item is taxable (lets say its $50) and the customer uses a coupon (lets say $5 off) the item is still taxable at $50, but the customer only pays $45 plus tax. So, Florida sales tax is 6%. If I apply a $5 coupon, the customer SHOULD be paying $48 which is $45 plus $3 tax on $50. Instead, when I apply a $5 coupon, the sale goes to $45 so customer pays $47.70. Is the only work-around to amend the coupon discount to total $5 with tax added in? (so make the coupon discount $4.72 within square so the actual discount is $5)

[Sean]

While I can't speak to the legal part of your question, you'd want to talk to your tax person, I can confirm that you're correct. Square's sales tax applies to the net amount of a sale. 

After doing a quick search online, it did seem like most states define the term “sales price” to be the selling price of the product less any discounts. Having said that, I'm not tax professional, and wouldn't want you to take my word for it. 

As for a workaround, I can't really think of anything other than manually calculating the cost of tax for each individual sale. You could add the manual calculation as an additional item to the sale.

[jsmstudio]

I have a problem with the way the discount is used in square.

For example, a customer purchases 150.00 worth of product which with 7% sales tax (10.50) totals 160.50.

Now if they have a store credit to use for 75.00 and I enter that, it changes their balance due to 80.25.

When their actual balance due should be 85.50.  This is because the discount is taken before the tax

is calculated and thus reduces the tax owed. 

It's been suggested to me to enter the discount amount at the end of the sale as a split payment to compensate for this.

That works fine for an in store customer.  But I cannot use that method when invoicing a client online.

Anyone else experiencing this situation.  It will really mess up your tax figures.

I would like to see an option for entering a discount or credit after tax so that it is more accurate.

[The_White_Hart]

Yes! This! Exactly this! 

I have the same problem applying discounts (or store credits, or pre-payments, or deposits, or gift certificates, etc.) without screwing up the sales tax. Like you, I can sometimes get around it by treating it as a split check, but that only creates different problems. Other times it's not feasible at all. 

Ideally, it would be a simple fix: Discount items should have an on/off switch for taxability just like normal inventory items do. But they don't.

Square? 

[EJ_]

@The_White_Hart @jsmstudio While it's not an ideal solution, see the workaround Sean suggested in his previous post. 

[pfs-rwc]

This is problem that square should get around to addressing. The workaround that @Sean proposed and @EJ_ referred to--which is to collect the tax on the portion of the sale covered by the coupon by manually calculating it and adding it as a separate (untaxed…) item--is kind of complicated to begin with, but more importantly, I don't think that the manually calculated/added tax will get reported in the Taxes report. In other words, when you evenutally run the report to figure out how much money you collected on behalf of your state and have to pass on, that extra that you so fastidiously calculated and collected won't get counted… I believe Square's system only reports the taxes that the system itself calculated.

I think part of the problem is that it's easy to confuse manufacturer's coupons with discounts. They're not discounts. If a customer applies a $5 coupon to a $10 sale and gives you a $5 bill for the rest, the net price isn't $5. It's still the regular old $10, it's just that the manufacturer who supplied the coupon is footing half the bill, and you get that (eventually…) when you send in the coupon and get a check back in the mail. With "store credit" like in @jsmstudio's example, I guess it's a little tricker: Was that $75 real money that somebody paid somewhere along the line (a gift card, an earlier purchase returned for credit, etc.)? Or is it actually a true discount that's been issued by the store (as a customer service courtesy, for example).

To me it seems the only real workaround for a sale with coupons is to treat it as a split ticket, which would calculate the proper amount of tax (and record it as tax). This is actually what's really happening: the cost of the item is being split between the customer and the manufacturer. So the face value of the coupon(s) is one portion of the split (select More > Other Payment Methods at checkout and use the box to enter some kind of note or code so you can remember what's going on). And the remainder is the customer's portion of the split, which includes the full sales tax amount. Do it this way and the sales tax will be properly collected, tracked, and reported.

Re. @jsmstudio's concern about this workaround not being available with invoices, I think partial payments are available as an option now, both at the POS and online via the dashbaord. You should be able to do something very similar.

[sawavaughters]

So I see this problem has been going on for around five years now without any attempt from Square to simply add a shipping field on invoices. 

Today, all I wanted to do was make an invoice with the products purchased, and add a discount. If I added all the items plus the discount, it came out fine but got messed up as soon as I added a "shipping" item. 

My final (and really ridiculous solution) was

1. Add each item with the tax already included in the basic price.

2. Disable taxes for all items.

3. Create the shipping item with shipping fee as the price.

4. Calculate the discount and add it as a set dollar amount (not percentage).

This got me the correct final total, and I ended up using this invoice. But the invoice is nonsense. No "total tax" displayed, "shipping" is a product instead of a part of the subtotal, and a dollar value as a discount instead of an easy to understand "20%". 

For a huge company like Square, this is a real pain to have to work with for a procedure that should be standard. 

Please fix this, Square. It's been years now.