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Manage Exempt Customers Using AvaTax Exemption

This article applies to:Avalara AvaTax Update

Some transactions are tax free, or exempt. Apply exemptions to transactions and communicate with exempt customers by using AvaTax Exemption. Add customers and then add information about their exemption, or import multiple customers and exemptions simultaneously. Finally, send a request to your customers to get new copies of their exemption documents.

AvaTax Exemption is included with AvaTax Update, allowing you to store up to 25 exemption documents for free. Upgrade to CertCapture to store more documents or to automate customer communication.

Add an exempt customer

  1. Go to Exemptions, and then click Add an exempt customer.
  2. Enter your customer's information:
    Field Action
    Customer Name Enter your customer's name as it appears on exemption documents.
    Customer Code A unique code to identify your customer. A customer code is automatically generated based on the customer's name. If your accounting software uses a customer code, use that instead.
    Customer Type Your customer's business or industry.
    Customer Description This field is only required when Customer Type is set to Other. 
  3. Enter your customer's address and click Validate to verify the correct jurisdictions are applied.
  4. Click Save.

Import multiple customers and exemptions

  1. Go to Exemptions, and then click Import Customers and Exemptions. Download the exemptions import toolkit.
  2. The toolkit contains the ECMS_import_template spreadsheet. Open the template and add customer information to it using the table below as a guide.
    • Do not modify the Column headings of the template
    • The Use column indicates required info
    • Each imported file may contain a max of 100,000 lines 
       
      Column Column heading Type (size) Use Description
      A ECMS Cert ID Integer Required

      A unique number AvaTax Update uses to differentiate the certificates in your import file. This value is used to identify records that fail to import. If you leave this field blank, AvaTax Update may assume all entries in your spreadsheet are one large certificate. We recommend using sequential numbering for this field. 

      This number is not imported as the final certificate ID; AvaTax Update assigns a unique value to each imported record

      B AvaCert Id Integer Optional A unique number AvaTax Update uses to apply exemptions instead of ECMS Cert ID, but only if Always exempt by invoice information is selected in your Advanced Account Settings.
      C Issuing Country Text (2) Required

      The two-character abbreviation of the region (state, province, or territory) that issued the exemption certificate.

      Use CA for Canada (GST) to create country-level exemptions when Canada is the issuing country.

      D Issuing Region Text (2) Required

      The two-character abbreviation of the region (state, province, or territory) that issued the exemption certificate.

      Use CA for Canada (GST) to create country-level exemptions when Canada is the issuing country.

      E Exemption No Text (50) Required The exemption certificate number associated with the issuing region. If you include dashes in the number, AvaTax removes them when they're imported.
      F Exemption No Type Text (50) Optional The type of exemption number. If this field is blank, AvaTax treats it as the taxpayer ID.

      TIN - Exemption number or taxpayer ID

      FEIN - federal employee identification number

      DLN - Driver's license number

      FDN - Foreign diplomat number

      G Eff Date Date (10) Required Effective date of the exemption certificate in yyyy-mm-dd or mm/dd/yyyy format.
      H End Date Date (10) Optional Expiration date for the exemption certificate in yyyy-mm-dd or mm/dd/yyyy format.
      I Company Code Text (50) Optional Unique company code. This is matched with the company code during tax calculations to locate an exemption certificate entry.
      J Customer Code Text (50) Required Unique customer code. This is matched with the customer vendor code during tax calculations to locate an exemption certificate entry.
      K Cert Type Integer Required Type of certificate:

      0 = Blanket certificate
      1 = Single use certificate, for a single purchase order or invoice (requires Invoice/PO No)

      L Invoice/PO No Text (50)

      Conditional if Cert Type = 0

      Required if Cert Type = 1

      Purchase order or invoice number.
      M Business Type Integer Required Type of business:

      1 = Accommodations and food services

      2 = Agricultural, forestry, fishing, and hunting

      3 = Construction

      4 = Finance and insurance

      5 = Information, publishing, and communication

      6 = Manufacturing

      7 = Mining

      8 = Real estate

      9 = Rental and leasing

      10 = Retail trade

      11 = Transportation and warehousing

      12 = Utilities

      13 = Wholesale trade

      14 = Business services

      15 = Professional services

      16 = Educations and healthcare services

      17=  Nonprofit organization

      18 = Government

      19 = Not a business

      20 = Other (requires Business Type Desc)

      N Business Type Desc Text (255)

      Conditional for most Business Types

      Required if Business Type = 20

      Description of business type.

      O Exemption Reason Text (1) Required Reason for exemption. If an exemption reason is only applicable in one country, that country's name is displayed beside the exemption reason.

      A = Federal government (United States)

      B = State government (United States)

      C = Tribe / Status Indian / Indian Band (both)

      D = Foreign diplomat (both)

      E = Charitable or benevolent org (both)

      F = Religious (both)

      G = Resale (both)

      H = Commercial agricultural production (both)

      I = Industrial production / manufacturer (both)

      J = Direct pay permit (United States)

      K = Direct mail (United States)

      L = Other (requires Exempt Reason Desc) (both)

      M = Educational (Both)

      N = Local government (United States)

      P = Commercial aquaculture (Canada)

      Q = Commercial fishery (Canada)

      R = Non-resident (Canada)

      P Exempt Reason Desc Text (255)

      Conditional for most Exemption Reasons

      Required if Exemption Reasons = L

      Description of exemption reason.
      Q Customer Name Text (100) Required Name of the customer on the exemption certificate.
      R Address 1 Text (50) Required The first line of the customer’s primary business address as it appears on the exemption document.

      All address information should identify the customer’s primary business address.

      S Address 2 Text (50) Optional Address line 2 for the customer.
      T Address 3 Text (50) Optional Address line 3 for the customer.
      U City Text (50) Required City name for the customer.
      V Region Text (3) Required The two- or three-character region (state, province, or territory) ISO code.
      W Postal Code Text (10) Required ZIP or postal code for the customer.
      X Country Text (2) Required The two-character country abbreviation for the customer. If this field is blank, AvaTax assumes US.
      • US = United States
      • CA = Canada

      If you're importing exemption certificates, the two-character country abbreviation is required. A list of supported abbreviations for other countries are found on the ISO website.

      Y Cert Status Text (10) Optional

      The status of the exemption: Active, Stopped, Expired. 

      Used for reporting purposes after exemptions have been added, not required for initial import.

      Z Review Status Text (10) Optional

      The status of the submitted exemption: Valid, Invalid.

      Used for reporting purposes after exemptions have been added, not required for initial import.

      AA Last Trans Date Text (10) Optional

      Date of the last transaction the exemption certificate applies to, in yyyy-mm-dd or mm/dd/yyyy format.

      Used for reporting purposes after exemptions have been added, not required for initial import.

      AB Applied Text (10) Optional

      The status of the submitted exemption: Applied, Not Applied. 

      Used for reporting purposes after exemptions have been added, not required for initial import.

      AC Created Date Text (10) Optional

      Date the exemption certificate was created, in yyyy-mm-dd or mm/dd/yyyy format.

      Used for reporting purposes after exemptions have been added, not required for initial import.

      AD Modified Date Text (10) Optional

      Date the exemption certificate was last modified, in yyyy-mm-dd or mm/dd/yyyy format.

      Used for reporting purposes, not required for initial import.

  3. Save your spreadsheet and return to Exemptions > Import Customers and Exemptions.
  4. Drag the file into the upload field or click Browse Instead to select the file for upload. 

Refresh the page if your new customers do not appear in the list.

Add exemption information to a customer

  1. Go to Exemptions, locate your customer, and then click Add an exemption.
  2. Enter your customer's exemption information:
    Field Action
    Issuing Country Choose the country where the exemption is being issued.
    Entity Use Code Choose the option that matches the customer's exemption information. Entity/use codes are applied based on government laws.
    Exemption Description This field is only required when the Entity Use Code is set to Other.
    Issuing Regions States, regions, or territories where your customer is exempt.
  3. Click Next and enter additional exemption details:
    Field Name
    Exemption Number The exemption number as it appears on the exemption document.
    Exemption Number Type

    The exemption number type, typically a Tax ID Number.

    Foreign Diplomat Number, Driver's License Number, and FEIN may be used for certain entity use codes.

    Effective / Expiration Date The duration of your customer's exemption.
    Exemption Type

    A blanket exemption applies to all transactions. 

    A single exemption only applies to transactions that match the Invoice or PO Number provided in the next field.

    PO / Invoice Number This field is only required when the exemption type is set to Single Exemption, and should match the PO / Invoice number as it appears on the exemption document.
  4. If you have a document to attach to the user, click Upload Document. Finally, Click Save.

The exemption has been added to your customer and is now active in AvaTax Update based on the effective and expiration dates. On the Your Exempt Customers page, click View Exemptions to review that customer's exemption details.

Ask customers for exemption documents

Ask your customers for exemption documents when their current exemption has expired or one is needed for an audit. 

  1. Go to Exemptions, find the customer, and then click Request Exemption.
  2. Enter the customer's name and email address.
  3. If you want, add a few words to the beginning of the email, and then click Send Request.

The customer gets an email from AvaTax Exemption with a secure link and instructions to submit a new exemption document.

 

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