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Separate Tax vs. Total Tax Calculations

Added: 9/30/2004 - Article ID#: K000181

Category Article ID# Date Description
Accounting K000181 09/30/04 Separate Tax vs. Total Tax Calculations

When taxes are calculated on a reservation, they may consist of multiple tax percentages.  For example, the tax rate for a room in Vail may consist of 8.5% sales tax for the county, 6.5% sales tax for the state.  The total tax is 15%, but RDP systems do not use 15% to calculate the tax, instead the 8.5% and 6.5% are used individually.  For example, using a $99 room rate and our sample tax percentages we get the following:

Description Tax Percentage Room Charge Tax Amount
Tax 1 % 6.5% $99 $6.435 or rounded = $6.44
Tax 2 % 8.5% $99 $8.415 or rounded = $8.42
Total of Tax 1 + Tax 2 Amounts     Correct Amount: $14.86
Total Tax % 15% $99 Incorrect Amount: $14.85

Taxes must be calculated individually, so when that liability is paid to the state or county, the amounts are correct.  In some cases, up to 4 taxes are collected, so the tax amount could differ by more than just one cent.  Taxes are also calculated for each day, rather than the entire stay and this may also account for descrepancies in tax calculations.

Taxes are entered into the system in the C7 table.  The individual tax percentages can be viewed there.

Customers should put on their folio or registration cards the individual tax amounts rather than the total tax percentage.  This will avoid customers calculating the taxes incorrectly.

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