Tax Percentage Decreasing on Payments

My taxable rate in my area (Texas) is 8.25%. When I receive a partial payment from a client (for a deposit), the system adjusts the rate to 7.62% instead of keeping it at the 8.25%.

This is problematic because even if I receive a deposit, in say, Q3, but the balance isn’t paid until Q4, I still have to pay the Texas Comptroller tax on the deposit. It’s not reconciling.

Here an example.

Client receives invoice for $750, and total with tax is $811.88. Total tax to be paid is $61.88

I receive a payment of $300. The tax to be paid for that quarter (if not paid in full) is $24.75.

However, on my tax transaction report it is showing $22.86.

What gives?

I did have a client that made partials all the way through the same quarter, but by the time I received full payment, the taxes reconciled.

$22.86 is correct.

8.25% tax on $750 tax-exclusive amount is $61.88

8.25% tax on $300 tax-inclusive payment from client is $22.86, see:

($300.00 / 108.25) * 8.25 = $22.86

When client pays the remainder $511.88, the tax will be:

($511.88 / 108.25) * 8.25 = $39.01

See both tax amounts ($22.86 + $39.01) will equal invoice tax total $61.88 (ignore 1 cent discrepancy which is due to rounding)

Excellent. I was able to reconcile that way. It seemed backwards, but I get it now.

For example, on a 100 payment, the system assumes that the tax is inclusive because I haven’t told it there is an additional amount to be taxed. Therefore, It’s saying that the amount of the sale is $92.38 plus the sales tax of $7.62, which gives the amount of $100.