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Who You Exempt

If you regularly sell to customers who're exempt from tax, you need to store their exemption certificates and consistently exempt their purchases. There's more than one way to exempt customers:

  • If you already have a method to store exemption certificates, send AvaTax Update your customers' exemption certificate numbers using your accounting software, or send us entity/use codes that explain why the customer should be exempt.
  • If you don't have a way to store certificates, use AvaTax Exemptions or CertCapture, depending on your needs:
    • To exempt buyers and store their exemption certificates, use AvaTax Exemptions.
    • 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. Exemption Certificate Example - Thumb.png

Use CertCapture

CertCapture manages exemption certificates and other compliance documents. It can be used with or without AvaTax Update. Use CertCapture to:

  • Send mail or email campaigns to ask your customers for certificates, and then use Campaign Insights to track their progress
  • Keep your customers' exemption certificates in one place, so you're ready for audits
  • Connect CertCapture to AvaTax Update to automatically exempt purchases from tax when appropriate

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.

Add a customer record to CertCapture from your accounting software

Add a customer's exemption certificate to CertCapture by adding a customer record to CertCapture.

To add a customer record to CertCapture from Microsoft Dynamics GP:

  1. Go to Cards > Sales > Customer.
  2. In the Customer Maintenance window, click Address.
  3. In the Customer Address Maintenance window, click Additional, and then click CertCapture Create Customer.
  4. In the Create Customer Record window:
    1. Type the required details for your customer, and then, to validate the address, click Validate.
    2. Click Send, and then, when the success message displays, click OK.

Use AvaTax Exemption

AvaTax Exemptions is included with AvaTax Update. To exempt a transaction from tax using AvaTax Exemptions, enter information from your customer's exemption certificate into AvaTax Update. AvaTax Exemptions stores the information with your customer's AvaTax Update record, so their future transactions are exempt.

You need copies of all of your customers' exemption certificates in case of an audit. AvaTax Exemptions allows you to store up to 25 exemption documents for free. You can upgrade AvaTax Exemptions if you need to store more than 25 documents.

Add your exempt customers and their exemption information under Settings > Manage Your Exempt Customers.

To optimize compliance, require an exemption certificate for exempt customers in AvaTax Update under Settings > Manage Advanced Account Settings.

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 Update 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 will use what they purchase

Entity/use codes are applied based on government laws. Use your accounting software to assign entity/use codes to your transactions.

Exempt customers from sales tax with an entity/use code

To assign an entity/use code to a customer in Microsoft Dynamics GP:

  1. Go to Cards > Sales > Customer.
  2. In the Customer Maintenance dialog box, click Address ID.
  3. In the Customer Address Maintenance dialog box, click Additional, and then click AvaTax Entity/Use Code.
  4. In the AvaTax Entity/Use Code dialog box, click Search .
  5. In the AvaTax Entity Code Lookup dialog box, select entity/use codes, click Select, and then click Save.
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