--> Skip to main content
Avalara Help Center

Exempt Customers from Sales Tax

There are different ways to exempt customers from tax: AvaTax lets you exempt customers using the Sage 300 exemption process, CertCapture, or entity/use codes. 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. For more information about available entity/use codes, see exemption reason matrices.

Exempt customer using Exemption Number

To exempt customer from sales tax using the customer's tax registration/exemption number, follow these steps: 

  1. Go to Accounts Receivables > A/R Customers > Customers.

  2. Select the customer.
  3. On the Invoicing tab, follow these steps:
    1. Set the Tax Class to 2.

      Note:

      • A transaction with a Tax Class of 2 and a valid Registration Number is exempted.
      • A transaction with a Tax Class of 1 is taxable and the customer is not exempted, even if the customer has a valid Registration Number.
      • A transaction with a Tax Class of 2 and an invalid or missing registration number is not exempted. The Tax Class is changed from 2 to 1 and the transaction is treated as taxable.
    2. In the Registration Number field, type the customer's tax registration/exemption number.
    3. Click Save, and then click Close.

Exempt customers with CertCapture

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

Create or select a customer

  1. Go to Sage Sales Tax powered by Avalara > AvaTax CertCapture Management > Avalara CertCapture.

  2. In the Avalara CertCapture window, select a Customer.

  3. On the Create Customer tab:
    1. Add the customer's address and click Validate Address.
    2. Click Add new Customer In CertCapture. Then, click OK.

    3. Click Close.

Initiate an exemption request

  1. Go to Sage Sales Tax powered by Avalara > AvaTax CertCapture Management > Avalara CertCapture.

  2. In the Avalara CertCapture window, select a Customer
  3. On the Initiate Exemption Request tab:
    1. Go to the Send Method section and select one of the options to send the certificate request.    
    2. Add a custom message. This field is useful for communicating instructions when you select Fax as the send method. 
    3. Click Initiate certificate request. Then, click OK.

    4. Click Close.

Retrieve certificate(s) status

  1. Go to Sage Sales Tax powered by Avalara > AvaTax CertCapture Management > Avalara CertCapture.

  2. In the Avalara CertCapture window, select a Customer.
  3. On the Retrieve Certificate(s) Status tab is a list of exemption certificates and their request status. The Request stage can be one of the following:
    • REQUESTINITIATED means 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 the customer hasn’t yet faxed the certificate.
    • CERTIFICATERECEIVED means that the customer has faxed the certificate.

    The Request Status can be Open or Closed.

  4. Click Retrieve Certificate Status to refresh the table details and load the latest list of certificates. 
  5. Click Close.

Retrieve certificate(s) 

  1. Go to Sage Sales Tax powered by Avalara > AvaTax CertCapture Management > Avalara CertCapture.

  2. In the Avalara CertCapture window, select a Customer.
  3. On the Retrieve Certificate(s) tab, follow these steps:
    1. If your certificate doesn't appear in the list, click Retrieve certificates to refresh and load the latest list of certificates.  
    2. To download the certificate, select the File Format (PNG or PDF), double click the row, and follow the steps on your computer for downloading a document.
    3. Click Close.

Assign Header-level entity/use code

To flag customers as exempt with the header-level entity/use code, follow these steps:

  1. Go to Sage Sales Tax, Powered by Avatax > AvaTax Customer Entity/Use Code Mapping.
    S300-AvaTaxCustomerEntityUseCodeMenuPath.png
  2. Next to the Customer Number field, click the Magnifying Glass and select the customer's number from the drop-down menu.
  3. Next to the Customer Address field, select the customer's address from the drop-down menu.
    S300-EntityUseCodeMapping.png
  4. In the Entity/Use Code field, click the Magnifying Glass and in the AvaTax Entity/Use Code finder, click the entity/use code you wish to use and click Select.S300-EntityUseCodeLookup.png
  5. Click Add.

Configure entity/use codes

Learn how to configure entity/use codesHoverTT.png before you map them to specific customer addresses.

Sage300_16.png

 

View and create your own entity/use codes using the Entity/Use Code menu.

  1. In the Entity/Use Code field, click the Magnifying Glass to select an Entity/Use Code.
  2. In the Description field, type the exempt reason.
  3. Click Save, and then click Close.

Sage300_17.png

Map entity/use codes

Use the Customer Entity Code menu to map entity/use codes to specific addresses. For more information about available entity/use codes, see exemption reason matrices.

  1. In the Customer Number field, click the Magnifying Glass and select the Customer Number you want to map. The Customer Name field auto-populates.
  2. In the Address Type field, select the address type from the drop-down menu.
  3. In the Entity/Use Code field, click the Magnifying Glass and select the Entity/Use Code you want to map.
  4. Click Add, and then click Close.

Sage300_18.png