If "Tax Exempt" is checked, the tax is still calculated in during the reporder process.
Steps to reproduce:
1) Create new Item in Item master and check the "Tax exempt" flag then Save the record.
2) On the vendors tab, add a new vendor and set it as the "default" vendor and re-save the record
3) Change the status to active
4) Select Action -> Item/Org details, and ensure it is active for the Org
5) Select Action -> Add the item to a storeroom
6) Open the Inventory application, and bring up the newly created item
7) Select Action -> Reorder Items and click "Run reorder". Take note of the PR generated
8) Open the PR that was created
9) On the PR lines tab, open the generated line item.
10) (Notice that the Taxexempt is checked). Change the Value of the "Unit Cost" to a value greater than zero.
Notice that the tax is still being calculated on the item even though it is designated as tax exempt. This only occurs during a reorder.
Resolving the problem
This has been recognized as a defect. APAR# IV42998 and it has been resolved in the Interim Fix 220.127.116.11