An exemption certificate number identifies a buyer as exempt. If you regularly sell to tax-exempt customers, you need to consistently exempt their purchases. You also need copies of all of your customers' exemption certificates in case of an audit. There's more than one way to do both:
- If you already have a method to store exemption certificates, send customers' exemption certificate numbers to AvaTax Update using your accounting software, or send entity/use codes that explain why the customer should be exempt.
- If you don't already have a way to store certificates, use AvaTax Exemption or CertCapture, depending on your needs:
- To exempt buyers and store their exemption certificates, use AvaTax Exemption.
- To exempt customers, and to request, generate, and store exemption certificates, use CertCapture.
You can exempt customers, but that doesn't mean you're compliant. You need valid documentation of your buyer's exemption certificate to support tax exemptions in case of an audit. Valid documentation includes copies of valid exemption certificates and the associated invoices. If you exempt customers from tax with exemption numbers or entity/use codes, keep organized records for all exempt purchases.
Use AvaTax Exemption
AvaTax Exemption is included with AvaTax Update. Use it to:
- Store up to 25 of your customers' exemption certificates in one place, free. Upgrade to CertCapture if you need to store more than 25 documents
- Automatically exempt purchases from tax when appropriate. Enter information from your customer's exemption certificate into AvaTax Update to exempt transactions from tax.
- AvaTax Exemption stores the information with your customer's AvaTax Update record, so future transactions are exempt
If you haven't set up AvaTax Exemption on your account, click Exemptions and then click Create Customer Exemptions to get started with your account.
- Once we've finished setting you up, add your exempt customers and their exemption information under Exemptions.
- To optimize compliance, require an exemption certificate for exempt customers in AvaTax Update under Settings > Manage advanced account settings.
CertCapture manages exemption certificates and other compliance documents. Use it with or without AvaTax Update. Use CertCapture to:
- Keep your customers' exemption certificates in one place
- Automatically exempt purchases from tax when appropriate
- Send mail or email campaigns to ask your customers for certificates, and then use Campaign Insights to track their progress.
CertCapture stores exemption information and official copies of exemption certificates for each customer. With CertCapture, you always have an organized, audit-ready database of exemption certificates.
If you're not using CertCapture to manage exemption certificates, contact your Customer Account Manager (CAM) for more information.
Use exemption certificate numbers or entity/use codes
An exemption certificate number identifies a buyer as exempt. To exempt a customer, enter the buyer's exemption number on the invoice when making a sale.
AvaTax uses an entity/use code to exempt a customer from tax. An entity/use code works in two ways:
- The code flags a transaction with a reason for the exemption based on the entity that's buying
- The code flags a transaction based on how the buyer uses what they purchase
Entity/use codes are applied based on government laws. Use your accounting software to assign entity/use codes to your transactions.