Taxes Calculated Differently for Shipping Address vs Default State Tax Calculation

Question

I've looked through other tax calculation issues on Stack Exchange and believe that my issue may be unique. I'm running Magento 1.9.3.8 with TaxJar 2.3.3. I'm also using Inchoo_PHP7 so Magento runs on PHP 7.0.29, in case that matters.

So, my problem: When a customer is located in the state of Texas where we have a Nexus, the tax rate is being calculated incorrectly. Instead of the correct rate of 8.25%, the tax rate is being calculated at 8%.

I use TaxJar to maintain the correct tax rates for Texas and Louisiana, since we have a nexus in each state. Those tax rates all seem to be correct. Texas, in particular, has a single state-wide rate of 8.25%.

Under System -> Sales -> Tax, I've got it configured to have no default tax destination calculation. So the user isn't shown taxes until they've entered their destination state, either through the shipping estimator or when entering their shipping address.

If I change the Default State to Texas, then I initially get the correct calculation (8.25%). But the moment the customer does a shipping estimate or enters their shipping address (in Texas), the calculation switches to the incorrect rate (8%).

How can that be? How could setting the Default State to Texas differ from the customer entering a Texas shipping address when calculating the tax rate?

I have pored over the tax tables, System settings, etc and found no tax rate setup for Texas that's 8%. Nor have I found a default tax rate that's 8%. The only other broader tax rate entry would be for Wholesale Customers, which is 0%. So that wouldn't be the issue.

Answer 1

Turns out, this issue was related to the TaxJar extension being used for real-time tax calculations. When TaxJar was setup to use its SmartCalcs feature (that is, TaxJar took care of the actual calculation), then the tax calculation was incorrect. However, if you turn off SmartCalcs and allow Magento to do the tax calculation based on the tax tables that are downloaded by TaxJar (which are verifiably correct), then the tax is calculated correctly.

Although this isn't the "ideal" solution because we don't take advantage of TarJar's SmartCalcs feature, it is an acceptable solution because taxes are ultimately calculated correctly.