For tax‑exempt orders, the return logic is different from standard taxable sales. When a customer returns a tax‑exempt order, only the product/fees portion is reversed; there is no sales tax component because none was collected in the first place.
By contrast, a taxable order refund reverses both the product amount and the tax, so the refund is tax‑inclusive.
In your accounting, both types show up under transaction-event-type = Return in the Settlements report, but exempt returns can make your reported gross sales look higher relative to tax collected, effectively inflating revenue figures by an estimated 8–12% if you don’t adjust for tax‑exempt vs taxable flows in your own books.
