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Who You Exempt

This article applies to:Avalara AvaTax for Salesforce

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 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 ECMS or CertCapture, depending on your needs:
    • To exempt buyers and store an image of their exemption certificates, use ECMS.
    • 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 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 CertCapture

CertCapture manages exemption certificates and other compliance documents. It can be used with or without AvaTax. 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 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 using CertCapture to manage your exemption certificates, learn more about how it works. If you're not using CertCapture to manage exemption certificates, contact your Customer Account Manager (CAM) for more information.

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 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.

Exempt customers from tax with their exemption number

In Salesforce Opportunity, the customer is exempted if the Non-Taxable field in Opportunity is enabled. Salesforce sends the Account Name as the exemption number to the Admin Console if the Exemption Number isn't added in the customer's Accounts.

  1. In Salesforce, go to Accounts.
  2. On the Accounts page, select the customer and click Edit.
  3. Go to Account Detail and type the Exemption Number.
  4. Click Save.

Here's an example of an exemption number in a customer's Account Detail. 

  • Sales tax calculated for a transaction:

  • Transaction in the Admin Console:

Exempt customers from tax with entity/use codes

Before you assign an entity/use code to a customer, ensure that the Enable Entity/Use Code is enabled in the Avalara settings page. To exempt a customer by assigning entity/use codes, follow these steps:

  1. Go to Accounts and click on the account you want to assign an entity/use code.
  2. In the Account Details page, click Edit.
  3. Next to Entity/Use Code, type the applicable code. This code is sent to AvaTax only if the Enable Entity/Use Code is enabled in the Avalara settings page.
  4. Click Save.