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Who You Exempt

This article applies to:Avalara AvaTax for NetSuite

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 NetSuite

To add a customer record to CertCapture from NetSuite, follow these steps:

  1. In NetSuite, go to Lists > Relationships > Customers, and then click New Customer.
  2. On the Customer page, type the required details, and then click Save. A message displays after the customer record is added.
  3. On the Customer page:
    1. To add address details and an email address, click Edit.
    2. Click the Address tab and add or select the address for which you want to generate the exemption certificate.

      NS_Cetcapture8.png

    3. Click Add Customer to CertCaptureCertCapture. A message displays when the customer is added to CertCapture.

      NS_Cetcapture9.png

Request an exemption certificate

To request an exemption certificate from a customer in CertCapture from NetSuite, follow these steps:

  1. In NetSuite, go to Lists > Relationships > Customers, and then click Edit next to the customer from whom you'd like to request an exemption certificate.
  2. On the Customer page, click the Address tab:
    1. Under Communication Mode, choose Email, and then click Request Exemption Certificate. A message displays on the screen and an email notification is sent to you when the request is placed in CertCapture.

      NS_Cetcapture10.png

      Email notification:

      NS_Cetcapture11.png

    2. To check the status of your certificate request, click Retrieve Certificate Status. The current stage of the request, displayed under Request Stage, shows "Request Initiated".

      NS_Cetcapture12.png

      The Request Stage can be one of the following options:

      • Request Initiated: You've sent the email, fax, or letter to the customer

      • Customer Responded: The customer has received an exemption certificate request and has responded to it by entering the wizard, but they haven't faxed the certificate

      • Certificate Received: The customer has faxed the certificate to CertCapture

      The Request Status can be Open or Closed.

    3. Click Email to generate the exemption certificate. Once the Request Stage shows "Customer Responded," proceed with the next step.

      NS_Cetcapture13.png

    4. Click Email again to complete the generation of the exemption certificate.
    5. Click Retrieve Certificate(s) Status. Once the certificate is complete, the Request Stage shows "Certificate Received."

      NS_Cetcapture14.png

    6. Click Retrieve Certificate. Select the exemption certificate, and then click Get Certificate. Download the exemption certificate in either .PNG or .PDF format.

      NS_Cetcapture15.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.

Use an exemption certificate number in NetSuite

  1. In NetSuite, go to Lists > Relationships > Customers, and then click Edit next to the customer for whom you'd like to add an exemption certificate number.
  2. Go to the AvaTax tab and type the Exemption Certificate No.

    NS_ExemptionNo.png

  3. Click Save.

Create an entity/use code

To create an entity/use code, follow these steps:

  1. In NetSuite, go to Avalara > Setup > Entity/Use Code.
  2. On the Entity/Use Code List page, click New.
  3. On the Entity/Use Code page, follow these steps:
    • Under ENTITY/USE CODE ID, type the entity/use code (typically one letter).
    • Under DESCRIPTION, type a description for the entity/use code.
  4. At the upper left, click Save.

Map an entity/use code to a customer

  1. In NetSuite, go to Lists > Relationships > Customers, and click Edit next to the customer to whom you'd like to map an entity/use code.
  2. On the Customer page, click the Address tab.
  3. Select an Entity/Use Code from the drop-down menu. If none exist, create a new one.
  4. Click Save.
    NetSuite2014_MapEntityUse2.png

Use a taxable checkbox

Use the Taxable checkbox in NetSuite to flag a customer as taxable. If you clear this checkbox, the customer is flagged as exempt from tax.

Flag customer as exempt in NetSuite

In AvaTax Update for NetSuite, configure tax calculations for a sales transaction that have the taxability at the header-level: 

  1. Go to Setup > Accounting > Set up Taxes. Click on United States and ensure that Per-Line Taxes on Transactions isn't enabled. If this option is enabled, the accounting tab isn't visible.

  2. In NetSuite, go to Transactions > Sales, and click Create Invoices.
  3. On the Invoice page:
    1. Select the Custom Form as Standard Product Invoice.
    2. Go to the Accounting tab and deselect Taxable. If this field isn't selected, then the customer is exempted from tax
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