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Avalara Help Center

Exempt customer still being taxed

Overview

Your exempt customer has a valid certificate in CertCapture but is still being taxed in AvaTax.

Environment

CertCapture and AvaTax

Resolution

CertCapture forwards certificate information to your AvaTax account whenever a new certificate is added or an existing certificate is changed. Certain certificates and entity use codes are valid in CertCapture but invalid in AvaTax.

If an exempt customer is still being taxed when you have a valid certificate in CertCapture, two problems could have occurred:

  1. The certificate wasn't transferred to AvaTax because of a conflict with CertCapture
  2. The certificate was transferred to AvaTax but something in your settings or transaction data is removing or overriding the exemption

 

Confirm that the certificate is in AvaTax:

  1. Click the Organization tab, click the company with the exemption, and then click the Exemptions sub-tab.
  2. Find the exemption certificate by its certificate or customer number.

 

A: The certificate isn't in AvaTax

  1. Sign into CertCapture and search for the certificate. Click the certificate to view its details.
  2. Click the History tab. Any errors that occurred while sending the certificate to AvaTax are listed chronologically.

    2019-01-29_10-16-29.png
  3. Correct any errors that are shown in the History Tab.
     
    Example error: Description
    Reason Code is not exempt in region(s): ( Invalid ExemptReasonId and region combination )

    AvaTax won't accept a reason code for a state or region that isn't fully exempt.

    CertCapture's exemption criteria is more flexible, so the certificate may be valid in CertCapture but rejected by AvaTax.

    Example: Reason Code G is taxable in Ontario. Since it isn't fully exempt, AvaTax doesn't accept it when CertCapture tries to send it over. This creates a transaction in AvaTax with reason code G that is not exempt.

B: The certificate is in AvaTax, but not exempting properly

  1. Confirm that exemption certificate settings aren't being ignored.
    • Click the Settings tab and then click Exemption Certificate Options.
    • United States and Canada should be set to Optional or Required
  2. Confirm that the entity use code being used is exempt in the state or region where the transaction occurred. Use our Exemption Matrix to check.
    • For example: Resale exemptions (Entity Use Code G) are not fully exempt in Canada. AvaTax won't accept certificates for a entity use code that isn't fully exempt.
  3. Confirm that your transaction and certificate information match: 
    • Confirm that the Destination Address includes the state or region on the exemption certificate. 
    • Confirm that the Transaction Dates occur before the expiration date on the exemption certificate.
    • Confirm that the Customer Code on the transaction and the exemption certificate match exactly.
  4. Check your custom tax rules to make sure one isn't making the entity use code taxable.
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