Discount Plans can be designated as vendor reimbursed for certain circumstances where a vendor is paying you back for discounts you offer on that vendor's products, and where your local tax code considers this reimbursement to be revenue subject to sales tax.
When you select Vendor Reimbursed Discount, the tax amount applied to a discounted item will be calculated based on the pre-discount price.
For instance, if a customer purchases a $5.00 item ($4.17 base price + $0.83 tax) and you discount this item by $1.00, instead of reducing the final price and accordingly recalculating the base price and tax ($3.33 base price + $0.67 tax), Green Bits will reduce the base price to $3.17 and the amount allocated to tax will stay at $0.83. This alternate calculation is then reflected on your Monthly Tax Report so you know your full sales tax liability, inclusive of the vendor reimbursement.
This setting is used in very rare circumstances and will result in inaccurate Monthly Tax Reports when used inappropriately. If you're unsure whether this setting is appropriate for your particular discount, consult an accountant or tax professional.