If you regularly sell to tax-exempt customers—such as government agencies or nonprofit organizations—you need to do two things:
- Indicate customer purchases are exempt so customers aren't charged sales tax.
- Decide how to organize and store valid customer exemption certificates and invoices in case your company is audited.
Before you begin
Learn about options for exempting customers and decide which one is best for your company.
- If you already have a way to manage exempt customers, skip these steps.
- To use Exemptions, go to AvaTax Update > Exemptions > Get Set Up.
For help adding customers, see add a customer to Exemptions.
- To exempt on a case-by-case basis, choose one of these methods depending on your business application.
- Enter the exemption certificate number in the transaction.
- Assign an entity use code to a customer at the line-level in a transaction. Note that this option is not available in all business applications.
Make sure entity use codes are enabled in your system before you assign one to a customer.
For example, if you use QuickBooks Desktop, go to File > AvaTax > Preferences > Customer Exemptions and make sure the Use Entity Use Codes box is selected.
When you use exemption certificate numbers or entity use codes, it's up to you to keep organized records of all exempt purchases.