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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
  • 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 Microsoft Dynamics GP

  1. Go to Cards > Sales > Customer.
  2. In the Customer Maintenance window, click Address.
  3. In the Customer Address Maintenance window, go to Additional and click CertCapture Create Customer.
  4. In the Create Customer Record window:
    1. Type all the required details for your customer.

      GP_Certs1.png

    2. To validate the address, click Validate.
    3. Click Send. The message "Customer successfully created" is displayed. Click OK.

      GP_Certs2.png

Request an exemption certificate

  1. Go to Cards > Sales > Customer.
  2. In the Customer Maintenance window, click Address.
  3. In the Customer Address Maintenance window, go to Additional and click Initiate Exemption Request.
  4. In the Exemption Certificate Request  window:
    1. Go to the Send Method section and select one of the options for communication. Click the link mentioned in the communication and complete the exemption certificate request process. 
    2. You can add a custom message. This field is useful for communicating instructions if you select the mode of communication as Fax.
    3. Click Send

      GP_Certs3.png

      The message 'The Exemption Certificate Workflow Request has been successfully generated. Tracking code is - xxxx-xxxxxxx' is shown. Click Ok.

      DAX_7certinitial_success.png

Use AvaTax Exemptions

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 customer from sales tax with exemption certificate numbers

To exempt customer from sales tax in AvaTax Update for Microsoft Dynamics GP, follow these steps:

  1. Go to Cards > Customer Maintenance and select a customer.
  2. In the Customer Maintenance dialog box, click Options.
    DGP_customer_maintenance.png
  3. In the Customer Maintenance Options dialog box, add the following details and then click Ok.
    • Tax Exempt 1: Type Exempt to exempt this customer from sales tax.
    • Tax Registration: Type the customer's tax registration number, know as BIN (Business Identification Number) sent by Microsoft Dynamics GP to AvaTax Update during tax calculation. This number is displayed in AvaTax Update as the Buyer's VAT No

DGP_customer_maintenance_options.png

Assign entity/use codes to customers

To find the utility to assign entity/use codes, in the Customer Maintenance dialog box, follow these steps:

  1. At the top left of the Customer Maintenance dialog box, click Address ID.
  2. In the Customer Address Maintenance dialog box, on the Additional menu, click AvaTax Entity/Use Code.

  3. In the AvaTax Entity/Use Code dialog box, click the Search (magnifying glass) icon.

    DGP_CustomerMaintenance_EntityUseCode1.png
  4. In the AvaTax Entity Code Lookup dialog box, click any entity/use code, and then at the upper left, click Select.

    DGP_CustomerMaintenance_EntityUseCode2.png
  5. In the AvaTax Entity/Use Code dialog box, at the upper left, click Save.
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