When you click on the P.O./Sales Tax text the Purchase Order details window will pop up:

On this screen you can select the reason for the Sales Tax exemption. There are various agencies or organizations that are not required to pay a state sales tax.

When an order is exempted from sales tax, the line items exempted will report on the  sales tax summarization as exempted.  Sales tax exemption reasons may be configured in System Setup.

NOTE: Check with your CPA, Accountant or state agency to ensure that you are collecting Sales Tax from all customers that are required to pay. Do not assume that if a customer tells you they don’t have to pay that they are correct. We also recommend you collect a Sales Tax Exemption request for each order that you exempt as a protection for why sales tax was not collected.  This documentation can come in handy during a sales tax audit.