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Non-US Tax Calculations and Rounding in Invoice Total for TeamConnect and Collaborati

This page covers the functionality for Line Item Level Non US Taxes being submitted on invoices in Collaborati and transferred to TeamConnect. It should be noted that in TeamConnect, the tax is recalculated at the line item level, which may result in a variance between the final total of the invoice and the originally submitted total from Collaborati.

When an invoice with Non US Tax  is uploaded from a LEDES file, Collaborati accepts the tax amounts as entered in the LEDES file.  The system performs a calculation to ensure that the numbers are balanced and notifies the user if they are not. However, it is important to note that this is not considered a hard error.

When an invoice is submitted to TeamConnect, the system calculates the tax amount based on the tax percentage mentioned in the invoice. The tax is then rounded to two decimal places using Half Even Rounding (Bankers Rounding) in TeamConnect. For each taxable line item, the tax is calculated as the original total multiplied by the tax percentage rounded. The tax amount for each line item is then added together to arrive at the total tax amount for the entire invoice.

It is important to note that depending on how the original LEDES file was created, the submitted total may differ from the calculated total of the invoice lines, and the total tax amount in TeamConnect may also differ. Here is an example of an actual invoice that illustrates this point.

"A law firm submitted an invoice for $20,021.74.  The pre tax amount was $17,112.60 with a 17 percent tax equal to $2,909.14.  However, the LEDES file contained the tax amount on each line item and the sum of the line items was  $20,021.77 with tax of  $2909.17 because some of the lines were rounded up. In Collaborati, the firm received a warning that the line item total did not match the submitted total.  However the invoice was accepted and transmitted to the client’s TeamConnect instance.  The submitted total was $20,021.74 but the sum of the line items with tax was $20,021.75.  This was because the invoice tax was rounded with half even rounding and two lines that were rounded up by the firm were rounded down by TeamConnect."

Usually, clients do not observe any discrepancies between the submitted total and the net invoice total. However, certain clients have set up validation rules that mandate both these figures to be identical.

When adjustments are made to invoices, the tax is recalculated.

This image shows how tax is recalculated when any adjustments are made in invoice.

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