About Tax Codes

Tax code defaulting logic differs based on the setting of tax mode on the Tax Systems form. In either mode (Area or Item), the defaulting begins at the Tax Systems form. If the tax mode is set to Area, defaulting begins with the default cust/vend tax code on the Tax Systems form. This tax code defaults to new customers and vendors. The tax code on the Customer/Vendor form then defaults down to the CO/PO respectively. At this point it is passed on to the invoice and the tax records.

The tax codes on the header (CO/PO) are the codes used to calculate taxes where the line item tax code is blank. However, the tax codes on the header are not defaulted to the line items. The codes on the line item are ALWAYS defaulted from the Items form.

For tax systems with Tax Mode set to Item, the defaulting begins at the Tax System form. When a new item is entered on the Items form, the item tax code gets set to the tax code in the default item tax code.

From this point, any time a new line item is added, whether in area or item mode, the new items' tax code(s) get set to the tax code(s) in Items, except in the case where a special (for example, non-zero tax rate) exempt code is entered on the header form.