Sales Order Has a Default Tax Item Value Even if the Item Is Non-Taxable

Scenario:

When a Sales Order is created for a Non-taxable Item, a Tax Code is being pulled up instead of -Not Taxable- Tax Item.

Solution:

The Tax Item Setup is being bypassed by the system when there is a Tax Item set on the Customer Record. Taxes are charged for all items on the Sales Order regardless of if they are Taxable or not on their Item Record.

To resolve:

1. Open on Edit mode the Customer Record 
2. Go to Financial tab
3. Tax Item: Remove the Value set in this Field
4. Click Save