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Manage Exempt Customers Using AvaTax Exemptions

This article applies to:Avalara AvaTax Update

Add or import tax-exempt customers and manage them in one place. Request new exemptions by email, store exemption documents for audits, or edit active exemptions. Go to Settings > Advanced Account Settings to exempt customers solely by invoice information or require an exemption document before exemptions are applied.

Exemptions are based on government laws and vary from state to state. AvaTax uses Entity Use Codes (EUCs) and exempt reasons to identify tax-exempt transactions.

Add an exemption

1. Add a customer 

  1. Sign in to AvaTax Update and click Exemptions. Click Add an exempt customer to create one at a time.
  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. This code should match the customer code in your accounting software.
    Customer Type Your customer's industry. This is important for assigning entity use codes to your customer in the next section.
    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.

Next, add your new customer's exemption details.

2. Add their exemption details

  1. Find your exempt customer in the list and click Add an exemption.
  2. Enter your exemption details, and then click Next.
    Field Action
    Issuing Country The country where the exemption is issued.
    Entity Use Code

    Select the Entity Use Code (EUC) that applies to your customer.  

    Entity Use Codes (EUCs) are letter codes that exempt businesses from tax based on government laws. They're tied to specific industries and exempt reasons.

    Your choices depend on the Customer Type you selected when creating the customer.

    Exemption Description Only required if you pick Other/Custom. This should describe the user's exempt reason.
    Issuing Regions The state or region where your customer is exempt from sales tax.
  3. Add exemption information based on the Entity Use Code and State or Region you selected.
    • Exemption Number - A unique number found on a customer's exemption document
    • Exemption Number Type - Typically an exemption number or taxpayer ID. Certain exemptions may require a Foreign Diplomat Number, Driver's License, or FEIN
    • Effective - The beginning of the exemption period
    • Expiration - When the exemption no longer applies to the customer or their transactions
    • Blanket vs Single - Apply the exemption to all transactions, or only transactions with a specific invoice or PO number
  4. Click Request a certificate or Upload a certificate to attach a PDF file to your customer, in case of an audit
    • Request - An email is sent to your customer with a secure link to complete and return the right exemption document
    • Upload - When you have a digital copy of your customer's exemption document
  5. Click Save.

Exemptions are active and applicable in AvaTax Update based on effective and expiration dates. Click View Exemptions to review a customer's exemption details.

Import exemptions

Unlike creating users manually, importing allows you to add customer information and their exemption details at the same time. 

  1. Go to Exemptions, and then click Import Customers and Exemptions.
  2. Download the Exemptions Import Toolkit. The toolkit contains the ECMS_import_template spreadsheet. 
  3. Open the template and add customer information. Use the table below as a guide.
    • Don't modify the Column headings of the template
    • Spreadsheets with more than 100,000 lines can't be imported. Break them up into smaller import files
       
      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 ISO-standard abbreviation of the country 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.

      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 mm/dd/yyyy format.
      H End Date Date (10) Required Expiration date for the exemption certificate in 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 Text (50) Required Type of certificate. Use the following text values:

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

      L Invoice/PO No Text (50)

      Conditional

      Purchase order or invoice number.

      Only required if Cert Type = SINGLE.

      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

      Description of business type.

      Only required if Business Type = 20.

      O Exemption Reason Text (1) Required Reason for exemption. Some exemption reasons are only applicable in the United States or Canada.

      A = Federal government (US-only)

      B = State government (US-only)

      C = Tribe / Status Indian / Indian Band (US / CA)

      D = Foreign diplomat (US / CA)

      E = Charitable or benevolent org (US / CA)

      F = Religious (US / CA)

      G = Resale (US / CA)

      H = Commercial agricultural production (US / CA)

      I = Industrial production / manufacturer (US / CA)

      J = Direct pay permit (US-only)

      K = Direct mail (US-only)

      L = Other (requires Exempt Reason Desc) (US / CA)

      M = Educational (US / CA)

      N = Local government (US-only)

      P = Commercial aquaculture (CA-only)

      Q = Commercial fishery (CA-only)

      R = Non-resident (CA-only)

      P Exempt Reason Desc Text (255)

      Conditional 

      Description of exemption reason.

      Only required if Exemption Reasons = L.

      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) Required

      Set this to Active.

      Z Review Status Text (10) Required

      Set this to Accepted.

      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.

  4. Save your spreadsheet and return to Exemptions > Import Customers and Exemptions.
  5. 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.

Request exemption documents

Ask your customers for exemption documents when their current exemption has expired or you need a copy for an audit.

  1. Go to Exemptions, find your customer, and then click Request Exemption.
  2. Enter the customer's name and email address.
  3. Text added to the Note field is inserted into the beginning of the request email.
  4. Click Send Request.

Customers receive an email containing a secure link and instructions for completing a new exemption document.

What does a request look like to my customer?

Customers receive an email message containing a secure link, a request code, and instructions for completing the exemption request.

Customers can click the link or copy and paste the request code at https://app.certexpress.com/. CertExpress walks them through completing the document.

Exemptions-Req-Add.png

Exemptions-Req-Select.png

Exemptions-Req-Sign.png

Change exemption requirements

AvaTax Update exempts customers from tax based on invoice information or a customer's certificate record.  

  1. Go to Settings > Manage Advanced Account Settings. Select the requirements for either US or CA:
    • Require an exemption certificate record and ignore invoice information
    • If there's a certificate record, use the certificate instead of invoice information
    • Always exempt by invoice information, ignore certificate records
  2. Click Save Settings.

 

 

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