Custom Sub Categories

I would like the ability to create "sub-categories".

Example: start by creating a custom category for the "tech support" department--a selection list, containing the following items:
- A/V
-Computer Hardware
-Computer Software
-Printing
-Phones

If the user selects the "Computer Hardware" category, a 2nd custom category drop-down would appear, with the following items:
-Mac Desktop
-Mac Laptop
-Windows Desktop
-Windows Laptop