The Special Price File, in addition to tracking price information,  is also used to store other per-customer/per-item settings including taxable status.

 

When a particular item is sold to a given customer for the first time, the system automatically creates a new entry in the Special Price File and it sets the value of the Special Price File's "Taxable" setting based on the setting of the item's entry in the Inventory File.

 

Since other factors come into play in determining the taxability of an item this modification tries to determine more accurately whether or not an item is taxable for a particular customer by examining some of the other settings that determine taxability like  the Industry Code and Territory Code settings.