Why is Sales tax not calculating correctly on sales order where discount was applied?

Hello, We need some assistance with sales tax calculations on items where a discount has been applied. Here is the scenario: we have an item that we are offering a 5% discount on. We also offer discounts on sales orders where the customer pick up the item/items from our warehouse. All discounts are set-up to apply before taxes. On the sales order, we add an item where the discount would apply so we add the discount. The taxes are calculated on the original price of the item. We have tried various changes to configuration