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Avalara Help Center

Why is my Hawaii exemption not working?

Overview

You are billing a customer in Hawaii and expected them to have no tax, but it is not exempting the customer from tax.

Environment

Avalara AvaTax
Hawaii

Resolution

  • Check the tax rate, if it is 0.5%:
    • Hawaii has a 0.5% tax that almost no one is exempt from, so it is expected that the tax rate on exempt sales will be .5%
    • Federal Government and D Foreign Diplomat are fully exempt in Hawaii, only those will have no tax
  • For tax higher than 0.5%, this indicates the exemption certificate is not being applied to the sale:
    • Check the date > Exemption Certificates will only exempt between the start date and the expiration date
    • Check the customer number > Customer code must match exactly to apply to the sale
    • Check that exemption is not Single Use, or if single use, the PO matches PO or Invoice number
  • ​To force the system to apply 0% tax, use a different exemption (A or D) or create a tax rule for the current exemption type