This is unbelievable! Exactly the same issue everyone has described here. Billable expense marked as taxable with a mark up, I add the items to my invoice and the items show up with the mark up (hidden), everything is selected as taxable, and the POS software does NOT calculate the tax for the markup. In the "Show the Math" menu there are no line items for the mark up. Not only did this cause me to first submit an incorrect tax amount to a customer, this invoice went months past due and I had my attorney sending out a final demand letter before we caught the error. I even went and categorized every mark up item and it still doesn't work!  I cannot believe this issue isn't fixed QuickBooks has a huge liability here basically exposing all users to under collecting and incorrectly paying sales tax. If you don't catch the issue it's not like you can go back to a customer and try to collect the sales tax. I will be dropping QuickBooks over this issue.