The Silent Auction Pro™ software calculates sales tax on taxable auction items based on the tax rate that is defined by the group administrator (). Tax is charged only on those items that are marked as taxable (the default setting) in the donations entry form.
Gift certificates are, by default, marked as non-taxable because merchants typically charge sales tax when certificates are redeemed. When entering donations, a gift certificate can be marked as taxable if desired.
In general, physical items are taxable. Consult with a tax professional to learn which types of items are taxable as the tax code varies in different jurisdictions.If an auction item consists of more than one donation and contains a taxable item, Silent Auction Pro calculates the tax due on the taxable item as a percentage of the final bid amount equal to the value that the taxable item contributed to the overall auction item's value. For example, consider two donations: D1 valued at $40 and D2 valued at $60 that are combined into one auction item, A1. Assuming that D2 is taxable and that your local tax rate is 7%, if the auction item sells for $80 then the tax calculated for auction item A1 would be:
Final bid * (Value of D2 / Total Value of the Auction Item) * Tax Rate = $80 * 60% * 7% = $3.36
Setting the tax rate to zero hides all references to taxable items and results in no sales tax on any item. If you see ERROR IN TAX CALCULATION on an invoice, the value of a donation was changed after that donation had been bundled into an auction item. In this case the % tax calculation in the invoice may be incorrect. To fix this you must open the auction item through the feature and re-save it by clicking so that the correct total value of the auction item is recalculated. You can then reload the invoice and the tax calculation should be correct.