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Exempt customers from sales tax in AvaTax for Communications

When you add an exemption number to a transaction, AvaTax for Communications exempts the customer from sales tax for the transaction. An exemption certificate number identifies a buyer as exempt. If you regularly sell to tax-exempt customers, you need to consistently exempt their purchases. You also need copies of all of your customers' exemption certificates in case of an audit.

Steps

  1. In Microsoft Dynamics 365 Finance and Operations, go to Modules > Account Receivable > All Customers.
  2. Select a customer and then select AFC Customer Exemption.
  3. On the AFC Customer Exemption page, select the General Settings tab, and specify the following information:
    Exemption number Enter the exemption number of the customer.
    Tax Description Select a tax type to exempt.
    Category Description Select a tax category to exempt.
    Exemption domain Select an exemption domain. The jurisdiction level in which the exemption jurisdiction must match the taxing jurisdiction. Domain determines when an exemption is to be applied. 
    • 0: Federal
    • 1: State
    • 2: County
    • 3: City
    Exemption Scope Select an exemption scope. 

    Exemption scope defines the tax levels in which the taxes will be considered as candidates for exemption. Scope determines where the exemption is to be applied. Select a combination of one or more of these values:

    • 128: Federal
    • 256: State
    • 512: County
    • 1024: Local
  4.   Select Save.

You can view the exemption amount detail on the AFC tax summary page.