Setting up multiple tax rates

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CoPOS can handle three tax rates. In CoPOS, the third tax rate is called an “alcohol rate,” but it can be used for any tax. It’s called “alcohol rate” because often the third tax is for alcohol.

To determine how to set it up, you need to know:

    1. What are the three tax rates you want to charge?
    2. How does your tax agency expect the report?

Depending on the report expected by your tax agency, you will use one of these two options:

  • Option 1) Report the tax collected on each item separately
  • Option 2) Report the taxes as the difference between the tax rates with the lowest tax rate being collected for each taxable item sold. The second lowest tax rate collects the difference between the low rate and the middle rate, and the highest tax rate collecting only the difference between the middle rate and the top rate.

Option 2 is often used when the city decides to collect a food and lodging tax on top of the normal state tax.
Option 2 is most common.

With either option, the same amount of tax is collected; it is just reported differently.

  • Example of how Option 1 works
    • Item A taxed at 4%
    • Item B taxed at 6%
    • Item C taxed at 8%

Each item costs $10 and you buy one each of Items A, B and C.

The tax report for Option 1 will show

    • 4% tax collected of 40 cents
    • 6% tax collected of 60 cents
    • 8% tax collected of 80 cents

$1.80 in total taxes collected.

  • Example of how Option 2 works
    • Item A taxed at 4%
    • Item B taxed at 6%
    • Item C taxed at 8%

Each item costs $10 and you buy one each of Items A, B and C.

The tax report for Option 2 will show

    • 4% tax collected of $1.20
    • 6% tax collected of $0.40
    • 8% tax collected of $0.20

$1.80 in total taxes collected.