Taxes with Amount Discounts off by $0.01

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jms asked Jun 17, '21 David Marginian Deactivated edited Jun 21, '21

Taxes with Amount Discounts off by $0.01

Hi, we have seen a rare issue with our order tax calculation when an order amount discount is included. Our tax calculation is off by $0.01.

According to https://docs.clover.com/docs/calculating-order-totals#step-3-order-level-discounts , we group lineitems according to taxes, calculate the per item subtotal after discounts (rounded) for each tax, apply the tax rate to each lineItemPriceAfterDiscounts, sum them and round the answer.

For example, what we do (all prices in cents):

Tax1 = 8.25%
ItemPrices= 550, 500, 750, 650 (all items have above tax applied)
Discount = 613
OrderDiscountMultiplier:
(550 + 500 + 750 + 650 - 613) / (550, 500, 750, 650) = 0.749795918

ItemPricesAfterDiscounts:
550 * 0.749795918 = 412
500 * 0.749795918 = 375
750 * 0.749795918 = 562
650 * 0.749795918 = 487
TaxAmounts 
412 * 0.0825 = 33.99
375 * 0.0825 = 30.9375
562 * 0.0825 = 46.365
487 * 0.0825 = 40.1775
TaxAmountRounded = 33.99 + 30.9375 + 46.365 + 40.1775 = 151.47 = 151

However, we noticed that a similar order was calculated with a tax of 152 by clover resulting a 1 cent difference. This means we are doing a rounding off error above.

The problem is that we rely on the calculation to determine the charge amount to pass to the e-commerce API. When this issue occurs, clover considers the order as partially paid since we are charging 1 cent less.

Please help us understand what we are doing wrong here. I feel like we are in accordance with the guides provided in the mentioned link.

Please do not suggest us to set our own totals to the order so that e-commerce doesn't calculate them for us. We can't use that option because then the order will start showing up in the Clover Dashboards and Orders App even if the customer later decides to cancel the payment.

Thank You

Orders e-commerce api Discounts

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Answer 1 · 2021-06-18T12:31:25Z

David Marginian Deactivated answered Jun 18, '21 David Marginian Deactivated edited Jun 21, '21

There is no place in our system that issues a request like the one you showed. We actually don't set totals for a clover e-commerce payment and we certainly don't use SPLIT_CUSTOM anywhere. (Maybe this was an internal request from clover e-commerce to another service that uses the invoking appId when we attempt the e-commerce payment, and since it is a lower amount, is assumed as a SPLIT_CUSTOM? I can't say)

Your hunch was absolutely correct, that call is coming from our EComm servers when it is setting the total immediately prior to payment. That is something I will watch our for in the future instead of assuming the third party is making the request.

Update:

I would like to thank JMS for his excellent research and persistence on this issue, per JMS, here is an example on how to calculate an order total:

Item{1, 2, 3} = 154, 204, 300 (item prices)
Tax{1, 2} = 10%, 5% (taxes and rates)

1) Group the line items by tax rates:
Tax1 <- Item1, Item2 (tax assignments)
Tax2 <- Item2, Item3  

2) Calculate the discount multiplier:
OrderAmountDiscount = 227
DiscountMultiplier = 0.655015197

3) Sum the subtotals for each tax grouping:
SubtotalForTax1Items = 154+204=358 
SubtotalForTax2Items = 204+300=504

4) Multiple the subtotal for each tax grouping by the discount multiplier:
DiscountedSubtotalForTax1Items = 358*0.655015197 = round(234.49) = 234
DiscountedSubtotalForTax2Items = 504*0.655015197 = round(330.12) = 330

5) Calculate taxes for each tax group:
Tax1Amount = 234 * 0.10 = round(23.4) = 23
Tax2Amount = 330 * 0.05 = round(16.50) = 17
TotalTax = 23 + 17 = 40

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jms commented · Jun 20, 2021 at 04:55 AM

Hi @ David. We had a feeling something was wrong with the rounding. Thank you for looking into this. But I still have a confusion:

I found the following code in the clover-calc-1.0.jar:

As you can see, it is a bit different from both our methods. Notice that the getDiscountedSubtotal (which is rounded subtotal for items with a given tax) is used to calculate the tax which is then also rounded. So according to the clover-calc-1.0.jar:

Discounted Subtotal = (550+500+750+650)*0.749795918 = 1837 (rounded)
Tax = 1837 * 0.0825 = 151.55 = 152 (rounded)

It seems double rounding does occur according the the clover-calc-1.0.jar, but it happens on a different level.

Can you please confirm which calculation logic is the definitive method to calculate taxes in this scenario? The reason why I ask this is because I don't want to change the calculation logic to have it again fail for some other scenarios, and I don't know if the clover-calc-1.0.jar is now outdated or not.

Thank You

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David Marginian ♦♦ jms commented · Jun 20, 2021 at 12:41 PM

Well, thank you for being so thorough and correcting my mistakes. I have updated my previous answer because I don't want it to cause confusion. I think what I have posted now is accurate. Please take a look at it and let me know what you think.

I would caution you calculating the total as you are above (total discounted line items * tax rate), as if a line item has multiple tax rates that differ from another line item it would lead to an incorrect calcuation.

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jms David Marginian ♦♦ commented · Jun 20, 2021 at 02:33 PM

Hi @ David. I think you misunderstood me. Let me clarify with a better example:

Item{1, 2, 3} = 154, 204, 300 (item prices)
Tax{1, 2} = 10%, 5% (taxes and rates)
Tax1 <- Item1, Item2 (tax assignments)
Tax2 <- Item2, Item3  
OrderAmountDiscount = 227

DiscountMultiplier = 0.655015197

SubtotalForTax1Items = 154+204=358 (this is the item price of relevant taxes after all item level discounts (none in this question))
DiscountedSubtotalForTax1Items = 358*0.655015197 = round(234.49) = 234
Tax1Amount = 234 * 0.10 = round(23.4) = 23

SubtotalForTax2Items = 204+300=504
DiscountedSubtotalForTax2Items = 504*0.655015197 = round(330.12) = 330
Tax2Amount = 330 * 0.05 = round(16.50) = 17

TotalTax = 23 + 17 = 40

The above calculation is what I see in the clover-calc-1.0.jar. Since our original scenario has only one tax, this basically boils down to the calculation I suggested before:

Discounted Subtotal = (550+500+750+650)*0.749795918 = 1837 (rounded)
Tax = 1837 * 0.0825 = 151.55 = 152 (rounded)

Using your calculation logic for the same scenario, we will have the following:

Discounted Line Item
154 * 0.655015197 = round(100.87) = 101
204 * 0.655015197 = round(133.62) = 134
300 * 0.655015197 = round(196.50) = 197

Line Item Tax
Tax1 = (101 + 134) * 0.10 = round(23.50) = 24
Tax2 = (134 + 197) * 0.05 = round(16.55) = 17

TotalTax = 24 + 17 = 41

Notice that the tax is now off by 1c for different scenarios. The above scenario in the Register App also shows the tax as $0.40 supporting my logic:

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Answer 2 · 2021-06-17T12:15:33Z

David Marginian Deactivated answered Jun 17, '21 David Marginian Deactivated edited Jun 18, '21

What is your app id (moderators only comment please)? I am asking because an API request is being made by a third party app and the total is being set to 19.89. I am guessing it isn't your app that is doing this so it sounds like we will need to contact the other third party developer involved and request that they fix their total calculation.

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Answer 3 · 2021-06-17T15:08:00Z

David Marginian Deactivated answered Jun 17, '21 jms edited Jun 18, '21

Your app XP.......02 is the app making the request that is setting the total to 19.89:

2021-06-16 08:54:54.865
RequestLog{reqBody={"total":1989,"payType":"SPLIT_CUSTOM"},

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jms commented · Jun 18, 2021 at 04:12 AM

Hi @ David,

There is no place in our system that issues a request like the one you showed. We actually don't set totals for a clover e-commerce payment and we certainly don't use SPLIT_CUSTOM anywhere. (Maybe this was an internal request from clover e-commerce to another service that uses the invoking appId when we attempt the e-commerce payment, and since it is a lower amount, is assumed as a SPLIT_CUSTOM? I can't say)

The real problem I still feel is that our calculation is wrong. We placed the same order with matched amounts and discounts in the sandbox Clover Register App, and this is what we got:

Notice that this also shows the total as 19.89 and tax as 1.52 instead of our incorrect values. This along with the e-commerce auto calculation both giving the same results indicates that there is something wrong with our calculation.

Could you please verify if the calculation we made is correct or not, because at the end of the day, there should be one value for totals and taxes right?

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David Marginian ♦♦ jms commented · Jun 18, 2021 at 04:37 AM

Very interesting. I will take a closer look and try to get to the bottom of this tomorrow morning.

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jms David Marginian ♦♦ commented · Jun 18, 2021 at 06:55 AM

Thanks @ David. Looking forward to it.

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