Tax Configuration for Inventory Items

Every inventory item in AccuArk has a Taxation tab that controls how sales tax is calculated when the item is sold at the Point of Sale. AccuArk supports four distinct tax modes, giving you the flexibility to handle tax-exempt items, location-based tax rates, customer-specific tax rules, and item-specific tax rate assignments. This guide explains each mode and how to configure it.

Accessing Tax Settings

Open an item in the item form and navigate to the Taxation tab. The tax mode selector appears at the top of the tab, with additional configuration options below that change depending on the selected mode.

The Four Tax Modes

Tax Free (Code: "f")

The Tax Free mode exempts the item from all sales tax.

Behavior:

• No tax is calculated or applied when this item is sold at the POS
• The item's line total on the receipt equals the selling price with zero tax
• No additional configuration is needed — simply select this mode and save

When to use: Items that are exempt from sales tax by law (certain food items, medical supplies, educational materials), items sold to tax-exempt organizations, or any product you have determined should not be taxed.

Tax By Location (Code: "l")

The Tax By Location mode applies the tax rate configured for the location where the sale occurs.

Behavior:

• The tax rate is determined by the POS location's configured tax rate, not by anything on the item itself
• Different locations can have different tax rates (e.g., a store in one county charges 7% while a store in another charges 8.5%)
• The item does not need individual tax rate assignments — it inherits from the location
• No additional configuration is needed on the Taxation tab beyond selecting this mode

When to use: This is the most common tax mode. Use it for the majority of taxable items where the tax rate should simply match the location's standard rate. It is the simplest approach for businesses operating in jurisdictions with a single sales tax rate per location.

Tax By Client (Code: "c")

The Tax By Client mode applies a tax rate based on the customer's account type rather than the location or the item.

Behavior:

• The tax rate is determined by the customer account type assigned to the customer on the POS transaction
• Different customer types can have different tax rates (e.g., Retail customers pay full tax, Wholesale customers pay reduced tax, Government customers pay no tax)
• If no customer is attached to the transaction, the system falls back to the default tax behavior
• No additional configuration is needed on the item's Taxation tab beyond selecting this mode — the rates are configured on the customer account types

When to use: Businesses that sell to different customer segments with different tax obligations. Common for wholesale/retail hybrid businesses, government suppliers, or businesses with tax-exempt customer categories.

Tax By Item (Code: "i")

The Tax By Item mode assigns specific tax rates directly to the item. This is the most granular option and gives you complete control over which tax rates apply.

Behavior:

• When this mode is selected, a tax rates grid (dgvTaxRates) appears on the Taxation tab
• The grid lists all available tax rates defined in your system
• You check the checkbox next to each tax rate that should apply to this item
• Multiple tax rates can be selected (they stack — e.g., state tax + county tax + city tax)
• Only the checked tax rates are applied when the item is sold at the POS

When to use: Items that have special tax treatment different from the standard location rate. Examples include:

• Alcohol or tobacco products that carry additional excise taxes
• Luxury items with surcharge taxes
• Items subject to multiple overlapping tax jurisdictions
• Products with reduced tax rates (e.g., essential goods taxed at a lower rate)

Tax Rates Grid (Tax By Item Mode)

When Tax By Item is selected, the dgvTaxRates grid shows the following for each tax rate:

You can add new tax rates directly from this tab if the rate you need does not exist yet. New rates are created inline and become available for all items.

How Tax Modes Affect POS Calculations

At the Point of Sale, the tax calculation follows this priority:

1. The POS reads the item's tax mode
2. Based on the mode, it determines the applicable rate:
   • Tax Free — Rate = 0%
   • By Location — Rate = the location's configured tax rate
   • By Client — Rate = the customer account type's tax rate (or default if no customer)
   • By Item — Rate = sum of all checked tax rates on the item
3. The tax amount is calculated: Tax = Line Total x Rate
4. The tax is added to the transaction total and displayed on the receipt

Tax calculations happen per line item, so different items in the same transaction can use different tax modes and rates.

Comparison Table

Tips

• Default to Tax By Location — For most businesses, Tax By Location is the simplest and most appropriate mode. Only use the other modes when you have a specific need.
• Use Tax Free sparingly — Make sure items marked as Tax Free are genuinely tax-exempt in your jurisdiction. Incorrect tax-free designations can create compliance issues.
• Review after adding locations — When you add a new business location, verify that its tax rate is configured correctly so that Tax By Location items are taxed at the right rate at the new location.
• Stack rates carefully with Tax By Item — When checking multiple tax rates, verify that the combined rate is correct. It is easy to accidentally double-count overlapping jurisdictions.
• Document your tax decisions — Use the Internal Notes field on items with non-standard tax treatment to explain why a specific tax mode was chosen (e.g., "Tax Free per state exemption code 123")