Itemize collected sales tax to prevent erroneous labelling of tax liability as income
According to Square API engineers, WooCommerce could send itemized tax information to Square but doesn't do so currently. As a result, Square receives a flat transaction amount, which Square extensions then pass on to QuickBooks as a tax-exempt transaction. The TaxJar idea is a workaround at best to an incomplete WooSquare extension.
From the Square API help desk:
"Unfortunately, itemization isn't currently available with the WooCommerce integration. Although Square integrates with WooCommerce to process payments, all API functions are operated and managed by WooCommerce. Square currently does provide itemization that would break out the tax and individual item sales for API integrations but at this time WooCommerce hasn't applied it to their integration. I'll be sure to share your thoughts with the Partnership team.
Ultimately this does lead to this issue that you are having. All of your in person transactions are itemized and due to the WooCommerce integration not being itemized the transaction comes in as the total amount charged. "