Assuming the data type of your
tax_status
column is
bit
, try:
<EditItemTemplate>
<asp:DropDownList ID="tax_status" runat="server" SelectedValue='<%# Bind("tax_status") %>'>
<asp:ListItem Value="True">Yes</asp:ListItem>
<asp:ListItem Value="False">No</asp:ListItem>
</asp:DropDownList>
</EditItemTemplate>