Sales Tax Example: Tax Included in Price

For this example, assume that Pennsylvania state has mandated that the displayed price for all food products must include the applicable sales tax amount. Therefore, whatever price is charged the customer must include the 1% sales tax rate.

In this case, the organization selects the Includes Tax option on the Prices records for food products. In the figure below, the organization charges a non-member price of $5.25 per unit of the Food Product, and this amount already includes the 1% sales tax for Pennsylvania state. (Additional Filter Rules on the Prices record restrict this price to only customers in Pennsylvania.)


Then, when a customer in Pennsylvania places an order for a Food product, the system automatically extracts the appropriate tax amount from the product price.

In the figure below, the customer orders 10 units of Food Product at $5.25/unit. This corresponds to an extended price of $52.50 for the order line.

Aptify automatically associates the order line with the applicable 1% sales tax and extracts that amount from the extended price. The system adds the tax amount to the Tax field and the remaining order line total (minus the tax) is added to the Sub-Total field.

In the figure below, the system computed the tax amount to be $0.52. This tax amount was added to the Tax field, and the remaining order line amount ($51.98) was added to the Sub-Total field.
Mathematically, $52.50 divided by 1.01 (1 plus the tax rate) equals $51.98 (rounding to the nearest cent). Subtracting this amount from the original total yields the applicable tax amount ($0.52).