In NetSuite, you can set up sales tax items and sales tax vendors to simplify the sales tax collection and payment process. To create a Tax Agency vendor record select the vendor category as ‘Tax agency.
It is not possible to add multiple subsidiaries for tax agency vendors. Because tax agency vendors cannot be shared between subsidiaries.
After this vendor is set up, you can create tax codes that you associate with the sales tax vendor. Go to Setup > Accounting > Taxes > Tax Codes > New. You must identify a vendor as a tax agency to ensure that it appears as such in accounting lists. Make sure the checkbox ‘Tax Agency’ is checked in the ‘Tax agency’ vendor category(Accounting list).
There may be situations to change the ‘Tax Agency’ vendor category. But the field may be grayed out.
Solution – The vendor Category should not have a Tax Agency checked for NetSuite to allow users to change the vendor category. Navigate to Accounting lists. From the filter drop-down select ‘Vendor Category’. Edit Tax agency. Uncheck the ‘Tax Agency’ checkbox. Now edit the vendor record and change the category.
Since the vendor is no longer categorized as a Tax Agency, replace the Vendor that is set as Preferred Tax Agency under Set Up Taxes page, and Tax Agency set under Tax Code record.
Check the Tax agency check box in the vendor category again so that the vendor name shows on the Tax code records(in the Tax Agency field).