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Exempt customers from tax

This article applies to:AvaTax

 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

Review options for exempting customers.

Tip icon Does your company participate in the Streamlined Sales Tax (SST) program? If so, there are additional requirements for your exemptions. See SST Exemption Requirements to learn more.

Steps

  1. If you already have a way to manage exempt customers, skip these steps.
  2. To use Exemptions, go to AvaTax > Exemptions > Get Set Up.
    For help adding customers, see add a customer to AvaTax.
  3. 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.
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      Tip icon

      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.

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