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Exempt Customers from Sales Tax

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 2012 exemption process. Entity/use codes are AvaTax specific designations, identifying various categories of exempt customers. Each entity/use code is associated with exemption tax rules 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 CertCapture

To exempt customers from sales tax with CertCapture, you need to:

Create or select a customer

  1. Go to Accounts receivable > Common > Customers > All customers.

  2. In the Customer Master window, you can either directly click AvaCerts > Create Customer or select a customer and then click AvaCerts > Create Customer.
  3. In the Create customer record in AvaCert window:
    1. Go to the Overview tab and select the customer address.

      DAX_2overviewtab.png

    2. On the Address tab, click Functions and then click Validate the address.

      DAX_3AddressTab.png

    3. On the Contact information tab, type the contact details for your customer.

      DAX_4ContactDetails.png

    4. Click Send. The message "Customer record has been successfully created in AvaCert" is shown. Click OK.

      DAX_5success.png

    5. Click Close.

Initiate an exemption request

  1. Go to Accounts receivable > Common > Customers > All customers.

  2. In the Customer Master window, you can either directly click AvaCerts > Initiate Exemption Request or select a customer and then click AvaCerts > Initiate Exemption Request.
  3. In the Exemption certificate request workflow window:
    1. To choose how to send a certificate request to a customer, in the Send Method section, select Email or Fax or Mail.   
    2. You can add a custom message to the request. This field is useful for communicating instructions if you send the exemption request via Fax.
    3. Click Send.

      DAX_6Exemptioncertificatereq.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

    4. Click Close.

Retrieve certificate(s) status

  1. Go to Accounts receivable > Common > Customers > All customers.

  2. In the Customer Master window, you can either directly click AvaCerts > Retrieve Certificate(s) Status or select a customer and then click AvaCerts > Retrieve Certificate(s) Status.
  3. In the Exemption Certificate Status window, you can review a list of exemption certificates and their request status. Click Close.

    Certificate Status.png

    The Request stage can be either of the following options:

    • REQUESTINITIATED means that you have sent the email, fax, or letter to the customer.
    • CUSTOMERRESPONDED means that the customer has received an exemption certificate request and has responded to it by entering the wizard, but hasn’t yet faxed the certificate. 
    • CERTIFICATERECEIVED  means that the customer has faxed the certificate to Certs.

    The Request Status can be Open or Closed.

Retrieve certificate(s) 

  1. Go to Accounts receivable > Common > Customers > All customers.

  2. In the Customer Master window, you can either directly click AvaCerts > Retrieve Certificate(s) or select a customer and then click AvaCerts > Retrieve Certificate(s).
  3. In the Retrieve exemption certificate window:
    1. Go to the Certificate Details tab and select the certificate.   
    2. To download the certificate, click the following buttons and follow the steps in your computer for downloading a document.
      • To download the certificate in PNG format, click Get Certificate as PNG.
      • To download the certificate in PDF format, click Get Certificate as PDF.
    3. Click Close.

    DAX_8Retrieve.png

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 be exempt from tax.

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 Avalara AvaTax > Utilities > Entity Use Code Mapping menu.
  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 the name for this address from the drop-down menu.
  6. In the Address field, select an address for that customer from the drop-down menu.
  7. In the Entity Use Code field, select an entity/use code from the drop-down menu.
  8. 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.

    EntityUseCode.png