For products and services that may be taxable in some situations and non-taxable in others, sales tax should be calculated based on the invoice transaction, not when the product or service item is created.

If the Taxable checkbox is marked on a specific invoice line, sales tax should be calculated accordingly. If the checkbox is not marked, sales tax should not be calculated. The taxability decision should occur at the invoice, sales receipt level where the actual transaction is being recorded.

Requiring users to create multiple versions of the same product or service, one taxable and one non-taxable, is redundant and inefficient. This approach increases the likelihood of user error, creates unnecessary complexity in product lists, and makes the Sales Tax Center more difficult to manage.

More importantly, this design may be causing incorrect sales tax calculations for customers who reasonably assume that checking or unchecking the taxable box on an invoice line will automatically update the sales tax calculation. If the tax calculation is instead controlled by the product setup, users may unknowingly collect, remit, or undercharge sales tax incorrectly.

This is an important issue that deserves consideration, as it impacts both usability and tax accuracy for businesses relying on this module.

Cathy Schaefer

The Bookkeeper Repairman, Inc.