Different states require different methods of rounding tax amounts, all of which can result in a few cents of difference on the line item level. Global Tax Determination (GTD) will use the correct method for the taxing jurisdiction where the transaction takes place. If there are any discrepancies, it will adjust the line items to add up to the correct total amount.
Document-level and line-level rounding
When a transaction takes place, there can be several lines on one invoice depending on how many items were included in the sale. Some states require you to add up these individual amounts and round the total, which is called document-level or invoice-level rounding. Other states require you to round each line individually and then add them up, which is called line-level rounding. These two methods don't always match and can lead to a difference of a few cents.
When a state requires document-level rounding, GTD works backward from the total tax amount to calculate the tax amounts on the individual line item levels.
Let’s look at an example from Massachusetts, where document-level rounding is the rule. Here, the line items are added up first, and the total amount is rounded, which comes to $212.30.
| Gross amount | Tax rate | Unrounded tax amount | Rounded tax amount |
| 145.84 | 6.25% | 9.115 | |
| 2278.69 | 6.25% | 142.418125 | |
| 972.24 | 6.25% | 60.765 | |
| Total | 212.298125 | 212.30 |
If you round each line item first and then add them up, the total rounded amount will be 1 cent more than in the previous example.
| Gross amount | Tax rate | Unrounded tax amount | Rounded tax amount |
| 145.84 | 6.25% | 9.115 | 9.12 |
| 2278.69 | 6.25% | 142.418125 | 142.42 |
| 972.24 | 6.25% | 60.765 | 60.77 |
| Total | 212.31 |
These amounts were rounded using the standard 5/4 rule, where the amount is increased by 0.01 when the third digit after the decimal is 5 or more, since US currency only extends to two decimal places. Most US jurisdictions use this rule.
To make sure that the rounded tax amounts on the line item level add up to $212.30, GTD uses the truncation method. If an amount has more than two decimals (e.g. 9.115), GTD cuts off everything after the second decimal:
| Unrounded tax amount | Truncated tax amount |
| 9.115 | 9.11 |
| 142.418125 | 142.41 |
| 60.765 | 60.76 |
| Total | 212.28 |
The total truncated tax amount (212.28) is less than the document-level rounded tax amount (212.30). So, GTD will find the difference between the two:
212.30 - 212.28 = 0.02
Now we need to add those 2 cents back into the total so that the sum reaches 212.30. The 2 cent difference is split among the lines that have the highest remainder to the right of the truncated values. 1 cent is added to the second line because 141.41 was originally 141.418125. That’s the highest remainder. The other 1 cent could be added to either line 1 or 3 because the remainder is the same. In this case, if the taxes are at the same tax level, it will be added to the first line.
| Truncated tax amount | Extra amount | Total rounded amount |
| 9.11(5) | 0.01 | 9.12 |
| 142.41(8125) | 0.01 | 142.42 |
| 60.76(5) | 60.76 | |
| Total | 212.30 |
The result is the correct total document-level tax amount: $212.30.