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Bookkeep’s Toast integration is designed to accurately reflect how Toast handles settlements—even when the underlying logic is complex. One of the most common areas of confusion is **sales tax withholding** and how it appears across orders.

This article explains how tax withholding works in Toast, why it may not appear on the same order, and how Bookkeep ensures accurate accounting.

## The Challenge: Tax Withholding in Toast

Toast orders can include **sales tax withholding**, but the way this is reflected in orders and settlements can be misleading:

- A specific order may indicate **tax withheld**
- However, the **actual withholding amount may not appear on that same order**
- Instead, it may show up in the **MCA Repayment Amount of a different order**

👉 This is **intentional behavior in Toast**, not an error

## **Why This Happens**

Toast’s settlement system treats withholdings (like marketplace facilitator tax) as a **restaurant-level obligation**, not a transaction-level item.

### Key mechanics:

#### 1. Debt Creation

- When a tax withholding is triggered (e.g., from a Toast Local order), it creates a **balance owed by the restaurant**

#### 2. “Next Available” Collection Logic

- Toast then collects that amount from the **next available captured payment**
- This could be a completely different order

#### 3. The Result

- The tax is:
  - **Triggered by Order A**
  - **Actually deducted from Order B**

👉 This is why you may see:
- Tax withheld on one order
- But the corresponding deduction appears in another order’s **MCA Repayment Amount**

## What is Included in MCA Repayments?

Toast may withhold part of a credit card deposit for several reasons, all grouped into a single field:

- **Toast Capital Payments**
- **Marketplace Facilitator Tax**
- **Instant Deposits**
- **Toast Delivery Services (fees and tips)**

⚠️ Important:

- Toast’s API provides **one combined MCA Repayment amount**
- There is **no breakdown by withholding type**

## Why This Creates Complexity

Because:

- Multiple withholding types are **aggregated**
- Tax withholding may appear on **a different order than where it originated**

It becomes difficult to:

- Identify the exact tax withheld per order
- Avoid **double counting or misclassification**

## How Bookkeep Handles This

Bookkeep has developed a method to ensure **accurate and reliable accounting** despite these limitations.

### 1. Dedicated Tax Withheld Line

- Bookkeep tracks **tax withheld on its own line**
- This ensures:
  - Proper visibility
  - No overpayment of sales tax

### 2. Cross-Order Matching Logic

- Bookkeep evaluates **payments across the same day**
- Identifies when:
  - A tax withholding from one order
  - Appears in another order’s **MCA repayment**

### 3. Preventing Double Counting

- When a match is identified:
  - Bookkeep **excludes the MCA repayment amount related to tax**
  - Because it has already been captured on the **tax withheld line**

👉 This avoids:
- Double counting the same withholding
- Overstating expenses or liabilities

## Example Scenario

1. **Order A (Marketplace Order)**
   - Triggers **$0.53 tax withholding**
   - Creates a liability at the restaurant level
2. **Order B (Next Payment Captured)**
   - Toast deducts **$0.53** from this payment
   - Shows up as **MCA Repayment Amount**
3. **Bookkeep Treatment**
   - Records **$0.53 as tax withheld (from Order A)**
   - Identifies the same $0.53 in Order B’s MCA repayment
   - **Excludes it from MCA totals to prevent duplication**

## Result

With Bookkeep:

- Tax withholding is **accurately tracked and reported**
- MCA repayments are **properly adjusted**
- Financials remain:
  - Clean
  - Free from double counting

## Summary

Toast’s handling of tax withholding is **order-agnostic**, which can create mismatches between where tax is triggered and where it is deducted.

Bookkeep solves this by:

- Tracking tax withheld independently
- Matching across orders and payments
- Excluding duplicate amounts from MCA repayments

👉 The result is **accurate sales tax reporting and clean accounting**, even in complex Toast tax withholding scenarios.