Until recently, Minnesota rounded sales tax calculations by looking out to the ten-thousandths place – as reflected in the state’s official sales tax charts. Earlier this week I discovered that the state now has an online sales tax calculator that rounds by looking out only to the thousandths place. This means that the 6.875% sales tax on $1.38 could be either $.09 or $.10 depending on which “official” resource is consulted.
As a programmer seeking to write code that produces accurate and consistent results this ambiguity spurred me to do a bit of research – some of which may help you to resolve similar questions.
It turns out that Minnesota – and more than twenty other states – are members of an organization known as the Streamlined Sales Tax Governing Board that seeks to establish uniform standards across member states. The organization’s uniform rounding rule may be what compelled Minnesota to make the change.
The rule specifies that calculations be carried out to the thousandths place. Any fraction of a cent less than one-half is to be rounded down and any fraction of a cent greater than or equal to one-half is to be rounded up to the next full cent. The official rule is defined in §324 of the Streamlined Sales and Use Tax Agreement. You can learn more about the SSTGB and find out if your state is a member by visiting their website.