How do I determine if an item is purchased with tax?
You determine if an item is purchased with tax by entering tax defaults. You can enter tax defaults, including tax status and tax code, for each inventory and non-stock item in four places: item master file, item location file, purchase order header, and purchase order line. The tax status indicates whether the item is taxable. The tax code indicates the tax rate and the type of tax.
When you create a purchase order, the items are taxed according to the tax status and the tax code associated with each item. You can apply a tax code after you determine that the item is taxable.
When you enter tax information at the header level, the tax is applied to any item on the purchase order that does not have a tax status and tax code already associated with it; in other words, the tax default will only override items with a blank tax code on the item master or item location files. For each line of the purchase order, you have the option to enter an individual tax status and tax code.
If a tax value exists on both the item master and item location files, the tax defaults from the item location file. This enables you to regulate the tax status according to its use at each location.