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Why is my exempt customer being charged tax in Hawaii?

Overview

I have a customer who is exempt for Resale, but it is being charged tax in Hawaii.

Environment

Avalara AvaTax

Resolution

  • Hawaii has an Excise Tax and specifically taxes Resellers at a reduced rate of 0.5%, instead of giving them a total exemption from tax.
  • The only entities that are completely exempt from tax are Foreign Diplomats and the Federal Government.