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I am looking for partner categories in v7. I have found some hidden fields in the view, but I don't see any setting to turn on these categories nor do I see any configuration menus like product categories where I can add them.

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It's under Sales --> Configuration--> Address Book --> Partner Tags or it can be simply accessed directly in the Partner View Form (Tags record: create and Edit)

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Oh thanks a lot. It calls them Categories when you go to that list view, but calling them tags in the menu is what caused me to keep missing them. Thanks again. I wish they would be consistent with their terminology.