Two Kinds of Price Reductions
Joe-funded redemptions keep the full sale on your books and get reimbursed. Your own promos reduce the sale and don't get reimbursed. Every tax and revenue number follows from this one distinction.
Joe-Funded Redemptions (network rewards, Global Codes)
The Patron pays less, but your sale doesn't shrink. The full price still counts as your revenue and your taxable base. Joe reimburses you the redeemed goods value plus the sales tax on it, at your location's rate — itemized on every payout.
Merchant-Funded Promos (your promo codes, manual register discounts)
These genuinely reduce the sale. Tax is calculated on the discounted price, revenue is the discounted amount, and there's no reimbursement.
The tax identity — true on every line of every report:
Tax Collected from Patrons + Tax Reimbursed by Joe = (Gross sales − Merchant-Funded Promos) × your local rate
Patrons only pay tax on what they actually paid. Joe covers the tax on what Joe funded.
Worked example (one day, beverages, 5.3% rate):
Gross sales $1,600.00, your promos $40.00, Joe redemptions $60.00 → taxable base $1,560.00. Patrons paid $79.50 in tax, Joe reimbursed $3.18, for a total of $82.68 owed — which equals $1,560.00 × 5.3%, exact to the penny.
- 100% redemption (a free drink): the Patron pays $0.00, including $0.00 tax. Joe's reimbursement covers the entire goods value plus its full tax. The identity still holds.
- Rate sourcing: reimbursed tax always uses the redeeming shop's local rate — never where the reward was originally earned, and never a blended rate.
FAQ
Why is tax owed on the full price when the Patron used a reward?
Because the reward is Joe paying part of the bill — not a discount on the sale. You're made whole partly by the Patron and partly by Joe, so tax applies to the full sale, and Joe's reimbursement includes its share of that tax.
Why do my own discounts lower the tax, but Joe's rewards don't?
Your discount lowers the actual price of the sale, so tax follows that lower price. A Joe reward doesn't lower the sale — it just changes who's paying for it.