When the Ignore Non-Taxable Pay Flag setting is enabled, the Sales Payment Type's, Eligible Items, Pay Formula's, Item is Non-Taxable when paid by this Payment type setting is ignored and tax is charged to the item.
The Ignore Non-Taxable Pay Flag is used only when an item is being paid for by a Payment Type that has an Eligible Items restriction Pay Formula that has the Non-Taxable setting enabled.
See:
Tax Tables - General Information
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