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Exempt Customers from Sales Tax

This article applies to:Avalara AvaTax for CS-Cart

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 using Avalara products.

Use the Avalara Exemption Certificate Management System (ECMS)

If you use AvaTax, the Exemption Certificate Management System (ECMS) is a cost-free feature of your account. To exempt a purchase from tax using ECMS, enable ECMS in AvaTax, and then enter information from your buyer's exemption certificate into AvaTax. ECMS stores the information with your customer's AvaTax record, so their future transactions are exempt.

ECMS doesn't store a copy of your buyer's certificate. You need copies of all of your buyers' exemption certificates in case of an audit, so if you use ECMS to exempt buyers from tax, maintain organized records of your customers' exemption certificates.

Use exemption certificate numbers or entity/use codes

An entity/use code is a string of characters that tells AvaTax to exempt a transaction from tax. It's called an entity/use code because it flags a transaction with a reason for exemption, based on the kind of entity that's buying - or how the buyer will use what they purchase. An exemption certificate number is a unique string of numbers found on an exemption certificate.

If you use AvaTax and want to exempt a transaction using an entity/use code, enable this option in your AvaTax Configuration menu in your accounting software, and then choose a code from available options in your accounting software when processing a transaction. To exempt a transaction using an exemption certificate number, enter the number when processing the transaction. Your accounting software may not support entity/use codes and exemption certificate numbers, so check your accounting software documentation to confirm that it can pass these codes.

Passing an entity/use code or an exemption certificate number exempts a transaction from tax, but it doesn't attach exemption information or store a copy of your buyer's certificate. You need complete records to support tax exemptions in case of an audit. If you exempt transactions from tax with entity/use codes, maintain organized records for all exempt purchases. For a list of available entity/use codes and their taxability by state or matrix, see Exemption Reason Matrices for US and Canada (Entity/Use Code List).

Exempt a customer with exemption certificate number

To exempt a customer in AvaTax for CS-Cart, follow these steps:

  1. In the CS-Cart administration panel, go to Customers > Users.
  2. Select the account that you want to exempt.
  3. In the User account information section, select Tax Exempt checkbox.
  4. Next to Tax exempt number, enter the exemption certificate number. If this field is blank, the customer is still exempted and by default Tax Exempt is sent to AvaTax
     

    CSCart - Tax exempt 1.png

  5. In the Storefront, place the order. The order details will now show that this order is exempt from tax. 
     

    CSCart - Tax exempt 2.png

  6. In the AvaTax Admin Console, for this order, the Exemption Number displays the exemption details. This order is now exempt from tax.
     

    CSCart - Tax exempt 3.png

Assign an entity/use code

To exempt a customer from sales tax using entity/use codes, follow these steps:

  1. In the CS-Cart administration panel, go to Customers > Users.
  2. Select the account that you want to exempt.
  3. In the User account information section, select the appropriate Tax Entity/Use Code.

    CSCart - Tax exempt 1.png

  4. In the Storefront place the order. The order details will now show that this order is exempt from tax.

    CSCart - Tax exempt 2.png

  5. In the AvaTax Admin Console, for this order, the Entity Use Code displays the exemption details. This order is now exempt from tax.

    CSCart - Tax exempt 3.png