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Avalara Help Center

Exempt Customers

There are different ways to exempt customers from tax. You can update the sales tax group, use entity use codesHoverTT.png, or use CertCapture. AvaTax allows you to exempt customers using the Microsoft Dynamics AX 2009 exemption process. Entity/use codes are AvaTax specific designations, identifying various categories of exempt customers. Each entity/use code is associated with exemption tax rulesHoverTT.png for each state indicating applicable exemption scenarios. An invoice or credit memo using an entity/use code to trigger a customer exemption also uses the entity/use code to classify transactions for detailed exemption reporting within the Admin Console.

Exempt customers with exemption certificate number

To update the sales tax group, determine the customer you want to update and perform the following updates:

  1. Go to Accounts Receivables > Common Forms > Customers > Choose Customer > Setup tab to open the Customer Card.
  2. Locate the Tax Exempt Number drop-down box
  3. Click the down arrow and click the appropriate tax exemption number for this customer.
  4. Every sale for this customer is now exempt from tax.

    Step 4.png

Map entity/use codes

Use the entity/use code mapping menu to assign a specific entity/use code to a specific customer address. For more information about available entity/use codes, see exemption reason matrices.

  1. Go to General Ledger > Setup > Sales tax > AvaTax > Utilities > Entity Use Code Mapping menu.

    Step 1.png
  2. Click in the grid and click the NEW icon.
  3. Click New Line.
  4. In the Customer Account field, select a customer from the drop-down menu.
  5. In the Address Name field, select an address for that customer from the drop-down menu.
  6. In the Entity Use Code field, select an entity/use code from the drop-down menu.
  7. Click the Save icon. Every sale for the customer at this address will be exempt from tax within the extent that exemption codes can exempt tax at that jurisdiction.