Can the total refund be allocated to the sale item and tax when issuing a refund? Specifically for partial refunds? Otherwise, Shopify sale tax reports are inaccurate. Do third-party apps like Tax Jar or Avalara correct for this issue?
I can't speak for other apps, but Sidr Tax tries to be as accurate as possible. If you chose the line items while issuing a refund, then a tax refund is also allocated to those items. If you issued a manual refund without line items, it's usually exempted because it's hard to know which item this refund goes to.