diff --git a/application/controllers/Items.php b/application/controllers/Items.php
index da0ce601d..373aad6b5 100644
--- a/application/controllers/Items.php
+++ b/application/controllers/Items.php
@@ -197,7 +197,7 @@ class Items extends Secure_Controller
 			$item_info->reorder_level = 1;
 			$item_info->item_type = '0'; // standard
 			$item_info->stock_type = '0'; // stock
-			$item_info->tax_category_id = 0;
+			$item_info->tax_category_id = 1;  // Standard
 		}
 
 		$data['item_info'] = $item_info;
diff --git a/application/controllers/Taxes.php b/application/controllers/Taxes.php
index e8e429b6b..022b2c854 100644
--- a/application/controllers/Taxes.php
+++ b/application/controllers/Taxes.php
@@ -77,12 +77,13 @@ class Taxes extends Secure_Controller
 	{
 		$tax_code_info = $this->Tax->get_info($tax_code);
 
-		$default_tax_category_id = 0; // Tax category id is always the default tax category
+		$default_tax_category_id = 1; // Tax category id is always the default tax category
 		$default_tax_category = $this->Tax->get_tax_category($default_tax_category_id);
 
 		$tax_rate_info = $this->Tax->get_rate_info($tax_code, $default_tax_category_id);
 
 		$data['rounding_options'] = Rounding_mode::get_rounding_options();
+		$data['html_rounding_options'] = $this->get_html_rounding_options();
 
 		if ($tax_code == -1)
 		{
@@ -93,7 +94,7 @@ class Taxes extends Secure_Controller
 			$data['state'] = '';
 			$data['tax_rate'] = '0.0000';
 			$data['rate_tax_code'] = '';
-			$data['rate_tax_category_id'] = '0';
+			$data['rate_tax_category_id'] = 1;
 			$data['tax_category'] = '';
 			$data['add_tax_category'] = '';
 			$data['rounding_code'] = '0';
@@ -149,7 +150,7 @@ class Taxes extends Secure_Controller
 
 		$tax_rate_data = array(
 			'rate_tax_code' => $this->input->post('tax_code'),
-			'rate_tax_category_id' => 0,
+			'rate_tax_category_id' => 1,
 			'tax_rate' => parse_decimals($this->input->post('tax_rate')),
 			'rounding_code' => $this->input->post('rounding_code')
 		);
diff --git a/application/language/en/common_lang.php b/application/language/en/common_lang.php
index 17bd58e9a..0031c51c7 100644
--- a/application/language/en/common_lang.php
+++ b/application/language/en/common_lang.php
@@ -58,6 +58,7 @@ $lang["common_searched_for"] = "Searched for";
 $lang["common_state"] = "State";
 $lang["common_submit"] = "Submit";
 $lang["common_total_spent"] = "Total Spent";
+$lang["common_unknown"] = "Unknown";
 $lang["common_view_recent_sales"] = "View Recent Sales";
 $lang["common_website"] = "website";
 $lang["common_welcome"] = "Welcome";
diff --git a/application/libraries/Tax_lib.php b/application/libraries/Tax_lib.php
index 964d09721..8e52b2345 100644
--- a/application/libraries/Tax_lib.php
+++ b/application/libraries/Tax_lib.php
@@ -179,7 +179,7 @@ class Tax_lib
 	 */
 	public function apply_sales_tax(&$item, &$city, &$state, &$sales_tax_code, $register_mode, $sale_id, &$sales_taxes)
 	{
-		$tax_code = $this->get_applicable_tax_mode($register_mode, $city, $state, $sales_tax_code);
+		$tax_code = $this->get_applicable_tax_code($register_mode, $city, $state, $sales_tax_code);
 
 		// If tax code cannot be determined or the price is zero then skip this item
 		if($tax_code != '' && $item['price'] != 0)
@@ -261,9 +261,9 @@ class Tax_lib
 		}
 	}
 
-	public function get_applicable_tax_mode($register_mode, $city, $state, $sales_tax_code)
+	public function get_applicable_tax_code($register_mode, $city, $state, $sales_tax_code)
 	{
-		if($register_mode == "SALE")
+		if($register_mode == "sale")
 		{
 			$tax_code = $this->CI->config->config['default_origin_tax_code']; // overrides customer assigned code
 		}
diff --git a/application/models/Tax.php b/application/models/Tax.php
index 0386d8f17..23d233760 100644
--- a/application/models/Tax.php
+++ b/application/models/Tax.php
@@ -59,7 +59,7 @@ class Tax extends CI_Model
 	{
 		$this->db->from('tax_codes');
 		$this->db->join('tax_code_rates',
-			'tax_code = rate_tax_code and rate_tax_category_id = 0', 'LEFT');
+			'tax_code = rate_tax_code and rate_tax_category_id = 1', 'LEFT');
 		$this->db->join('tax_categories',
 			'rate_tax_category_id = tax_category_id');
 		$this->db->where('tax_code', $tax_code);
@@ -290,7 +290,7 @@ class Tax extends CI_Model
 	public function delete_tax_rate_exceptions($tax_code)
 	{
 		$this->db->where('rate_tax_code', $tax_code);
-		$this->db->where('rate_tax_category_id !=', 0);
+		$this->db->where('rate_tax_category_id !=', 1);
 
 		return $this->db->delete('tax_code_rates');
 	}
@@ -302,7 +302,7 @@ class Tax extends CI_Model
 	{
 		$this->db->from('tax_codes');
 		$this->db->join('tax_code_rates',
-			'tax_code = rate_tax_code and rate_tax_category_id = 0', 'LEFT');
+			'tax_code = rate_tax_code and rate_tax_category_id = 1', 'LEFT');
 		if (!empty($search))
 		{
 			$this->db->like('tax_code', $search);
@@ -376,7 +376,7 @@ class Tax extends CI_Model
 		$suggestions = array();
 
 		$this->db->from('tax_categories');
-		$this->db->where('tax_category_id !=', 0);
+		$this->db->where('tax_category_id !=', 1);
 		if (!empty($search))
 		{
 			$this->db->like('tax_category', '%'.$search.'%');
@@ -430,7 +430,7 @@ class Tax extends CI_Model
 		$this->db->from('tax_code_rates');
 		$this->db->join('tax_categories', 'rate_tax_category_id = tax_category_id');
 		$this->db->where('rate_tax_code', $tax_code);
-		$this->db->where('rate_tax_category_id !=', 0);
+		$this->db->where('rate_tax_category_id !=', 1);
 		$this->db->order_by('tax_category', 'asc');
 
 		return $this->db->get()->result_array();
diff --git a/application/models/enums/Rounding_mode.php b/application/models/enums/Rounding_mode.php
index 46f75cb01..603b24054 100644
--- a/application/models/enums/Rounding_mode.php
+++ b/application/models/enums/Rounding_mode.php
@@ -40,6 +40,7 @@ class Rounding_mode
 	{
 		$CI =& get_instance();
 		$CI->load->helper('language');
+		$x = '';
 		foreach (Rounding_mode::get_rounding_options() as $option => $label)
 		{
 			$x .= "<option value='$option'>".$label."</option>";
@@ -49,7 +50,7 @@ class Rounding_mode
 
 	public static function round_number($rounding_mode, $amount, $decimals)
 	{
-		if($rounding_mode != Rounding_mode::ROUND_UP)
+		if($rounding_mode == Rounding_mode::ROUND_UP)
 		{
 			$fig = (int) str_pad('1', $decimals, '0');
 			$rounded_total = (ceil($amount * $fig) / $fig);
diff --git a/application/views/taxes/form.php b/application/views/taxes/form.php
index 44e73495d..894e5dd73 100644
--- a/application/views/taxes/form.php
+++ b/application/views/taxes/form.php
@@ -150,63 +150,67 @@
         </table>
 
     </fieldset>
+
 <?php echo form_close(); ?>
 
 <script type="text/javascript">
-//validation and submit handling
-$(document).ready(function() {
+    //validation and submit handling
+    $(document).ready(function() {
 
-    $("#add_tax_category").autocomplete({
-        source: '<?php echo site_url("taxes/suggest_tax_categories"); ?>',
-        minChars: 0,
-        autoFocus: false,
-        delay: 10,
-        appendTo: ".modal-content",
-        select: function (e, ui) {
-            if ($("#tax_category_id" + ui.item.value).length == 1) {
-                $("#tax_category_id" + ui.item.value).val(parseFloat($("#tax_category_id" + ui.item.value).val()) + 1);
+        $('#tax_code_form').validate($.extend({
+            submitHandler: function (form) {
+                $(form).ajaxSubmit({
+                    success: function (response) {
+                        dialog_support.hide();
+                        table_support.handle_submit('<?php echo site_url('taxes'); ?>', response);
+                    },
+                    dataType: 'json'
+                });
+
+            },
+            rules: {
+                tax_code: "required",
+                tax_rate: "required"
+            },
+            messages: {
+                tax_code: "<?php echo $this->lang->line('taxes_tax_code_required'); ?>",
+                tax_rate: "<?php echo $this->lang->line('taxes_tax_rate_required'); ?>"
             }
-            else {
-                $("#tax_code_rates").append("<tr>" +
-                    "<td><a href='#' onclick='return delete_tax_code_rate_row(this);'><span class='glyphicon glyphicon-trash'></span></a></td>" +
-                    "<td>" + ui.item.label + "</td>" +
-                    "<td><input class='form-control input-sm' id='exception_tax_rate_" + ui.item.value + "' name=exception_tax_rate[" + ui.item.value + "] value=''/></td>" +
-                    "<td><select id='exception_rounding_code_" + ui.item.value + "' class='form-control input-sm' name=exception_rounding_code[" + ui.item.value +
-                    "] aria-invalid='false'><?php echo Taxes::get_html_rounding_options(); ?></select></td>" +
-                    "</tr>");
+        }, form_support.error));
+
+
+        $("#add_tax_category").autocomplete({
+            source: '<?php echo site_url("taxes/suggest_tax_categories"); ?>',
+            minChars: 0,
+            autoFocus: false,
+            delay: 10,
+            appendTo: ".modal-content",
+            select: function (e, ui) {
+
+                var rounding_options = "<?php echo $html_rounding_options; ?>";
+
+                if ($("#tax_category_id" + ui.item.value).length == 1) {
+                    $("#tax_category_id" + ui.item.value).val(parseFloat($("#tax_category_id" + ui.item.value).val()) + 1);
+                } else {
+                    $("#tax_code_rates").append("<tr>" +
+                        "<td><a href='#' onclick='return delete_tax_code_rate_row(this);'><span class='glyphicon glyphicon-trash'></span></a></td>" +
+                        "<td>" + ui.item.label + "</td>" +
+                        "<td><input class='form-control input-sm' id='exception_tax_rate_" + ui.item.value + "' name=exception_tax_rate[" + ui.item.value + "] value=''/></td>" +
+                        "<td><select id='exception_rounding_code_" + ui.item.value + "' class='form-control input-sm' name=exception_rounding_code[" + ui.item.value +
+                        "] aria-invalid='false'>" + rounding_options + "</select></td>" +
+                        "</tr>");
+                }
+                $("#add_tax_category").val("");
+                return false;
             }
-            $("#add_tax_category").val("");
-            return false;
-        }
+        });
+
+
     });
 
-    $('#tax_code_form').validate($.extend({
-        submitHandler: function (form) {
-            $(form).ajaxSubmit({
-                success: function (response) {
-                    dialog_support.hide();
-                    table_support.handle_submit('<?php echo site_url('taxes'); ?>', response);
-                },
-                dataType: 'json'
-            });
-
-        },
-        rules: {
-            tax_code: "required",
-            tax_rate: "required"
-        },
-        messages: {
-            tax_code: "<?php echo $this->lang->line('taxes_tax_code_required'); ?>",
-            tax_rate: "<?php echo $this->lang->line('taxes_tax_rate_required'); ?>"
-        }
-    }, form_support.error));
-
-});
-
     function delete_tax_code_rate_row(link) {
         $(link).parent().parent().remove();
         return false;
     }
 
-
-</script>
\ No newline at end of file
+</script>
diff --git a/database/3.0.2_to_3.1.0.sql b/database/3.0.2_to_3.1.0.sql
index 4f6d661b2..c6d564a79 100644
--- a/database/3.0.2_to_3.1.0.sql
+++ b/database/3.0.2_to_3.1.0.sql
@@ -169,11 +169,6 @@ CREATE TABLE IF NOT EXISTS `ospos_tax_categories` (
   PRIMARY KEY (`tax_category_id`)
 ) ENGINE=InnoDB DEFAULT CHARSET=utf8;
 
-INSERT INTO `ospos_tax_categories` ( `tax_category_id`,`tax_category`, `tax_group_sequence` ) VALUES
-  (0, 'Standard', 10),
-  (1, 'Service', 12),
-  (2, 'Alcohol', 11);
-
 ALTER TABLE `ospos_items`
   ADD COLUMN `tax_category_id` int(10) NOT NULL DEFAULT 0;
 
@@ -244,17 +239,33 @@ INSERT INTO `ospos_grants` (`permission_id`, `person_id`) VALUES
 
 UPDATE ospos_items SET receiving_quantity = 1 WHERE receiving_quantity = 0;
 
--- fix tax category maintenance
-
-ALTER TABLE `ospos_tax_categories`
-  MODIFY COLUMN `tax_category_id` int(10) NOT NULL AUTO_INCREMENT;
-  
 -- long alternate description
   
 ALTER TABLE `ospos_sales_items`
   MODIFY COLUMN `description` varchar(255) DEFAULT NULL;
   
 -- fix tax category maintenance
-  
+
+DELETE FROM `ospos_tax_categories` where tax_category_id in (0, 1, 2, 3);
+
 ALTER TABLE `ospos_tax_categories`
   MODIFY COLUMN `tax_category_id` int(10) NOT NULL AUTO_INCREMENT;
+
+INSERT INTO `ospos_tax_categories` ( `tax_category_id`,`tax_category`, `tax_group_sequence` ) VALUES
+  (1, 'Standard', 10),
+  (2, 'Service', 12),
+  (3, 'Alcohol', 11);
+
+ALTER TABLE `ospos_items`
+  MODIFY COLUMN `tax_category_id` int(10) NOT NULL DEFAULT 1;
+
+UPDATE `ospos_items` SET `tax_category_id` = 1 WHERE `tax_category_id` = 0;
+
+-- If you have added any tax codes, the following will correct the rate_tax_category_id on the tax_code_rates table,
+-- but you might need to add more UPDATE statements depending on how may tax codes and/or tax categories you've added
+
+UPDATE `ospos_tax_code_rates` SET rate_tax_category_id = 4 WHERE rate_tax_category_id = 3;
+UPDATE `ospos_tax_code_rates` SET rate_tax_category_id = 3 WHERE rate_tax_category_id = 2;
+UPDATE `ospos_tax_code_rates` SET rate_tax_category_id = 2 WHERE rate_tax_category_id = 1;
+UPDATE `ospos_tax_code_rates` SET rate_tax_category_id = 1 WHERE rate_tax_category_id = 0;
+
diff --git a/database/database.sql b/database/database.sql
index 2f33a7ec6..1fa42fac6 100644
--- a/database/database.sql
+++ b/database/database.sql
@@ -217,7 +217,7 @@ CREATE TABLE `ospos_items` (
   `is_serialized` tinyint(1) NOT NULL,
   `stock_type` TINYINT(2) NOT NULL DEFAULT 0,
   `item_type` TINYINT(2) NOT NULL DEFAULT 0,
-  `tax_category_id` int(10) NOT NULL DEFAULT 0,
+  `tax_category_id` int(10) NOT NULL DEFAULT 1,
   `deleted` int(1) NOT NULL DEFAULT '0',
   `custom1` VARCHAR(25) NOT NULL,
   `custom2` VARCHAR(25) NOT NULL,
@@ -821,9 +821,9 @@ CREATE TABLE IF NOT EXISTS `ospos_tax_categories` (
 --
 
 INSERT INTO `ospos_tax_categories` ( `tax_category_id`,`tax_category`, `tax_group_sequence` ) VALUES
-  (0, 'Standard', 10),
-  (1, 'Service', 12),
-  (2, 'Alcohol', 11);
+  (1, 'Standard', 10),
+  (2, 'Service', 12),
+  (3, 'Alcohol', 11);
 
 
 -- --------------------------------------------------------
diff --git a/database/tables.sql b/database/tables.sql
index 7c65e6255..84637e45b 100644
--- a/database/tables.sql
+++ b/database/tables.sql
@@ -821,9 +821,9 @@ CREATE TABLE IF NOT EXISTS `ospos_tax_categories` (
 --
 
 INSERT INTO `ospos_tax_categories` ( `tax_category_id`,`tax_category`, `tax_group_sequence` ) VALUES
-  (0, 'Standard', 10),
-  (1, 'Service', 12),
-  (2, 'Alcohol', 11);
+  (1, 'Standard', 10),
+  (2, 'Service', 12),
+  (3, 'Alcohol', 11);
 
 
 -- --------------------------------------------------------