Is the coupon code applied before or after tax?

In Iris, the coupon code can only be applied before tax is calculated. Iris Works does not provide advice regarding requirements applicable to your business, so it is recommended you consult with a local tax advisor for any questions about collecting tax.

How is the sales tax calculated when I use a coupon code?

When a coupon code is used on an invoice that contains tax, Iris will find out what percentage of the initial total that the taxable items make up. That percentage is then multiplied by the total discount, which is what is deducted from the taxable item amount. That provides a final discounted amount of the taxable goods that will be calculated for the sales tax total.

Example 1:

Sales tax = 7%

My invoice contains a $50 non-taxable item, and a $100 taxable item. My client is using a $25 coupon code.

Step 1: What percentage of the grand total is the taxable item?

Step 2: How much is 67% of the total discount?

Step 3: How much is the taxable item less the discount from step 2?

Step 4: How much sales tax is now owed?

Example 2:

Sales tax = 7%

My invoice contains a $50 non-taxable item, and a $100 taxable item. My client is using a 25% coupon code.

Step 1: What percentage of the grand total is the taxable item?

Step 2: What is the total dollar amount discount before taxes?

Step 3: How much is 67% of the total discount?

Step 3: How much is the taxable item less the discount from step 2?

Step 4: How much sales tax is now owed?

Note: Coupon codes only work with Square as the payment processor. All other processors will be disabled.