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What should I do with Entity/Use codes in AvaTax now that the Streamlined Sales Tax Project (SSTP) has separated educational and religious organizations into two categories?

Overview

You want to know what to do with Entity/Use codes in AvaTax now that the Streamlined Sales Tax Project (SSTP) has separated educational and religious organizations into two categories.

Environment

AvaTax

Resolution

Background

Effective January 1, 2018, the Streamlined Sales Tax Project (SSTP) split educational and religious organizations into two separate categories. Previously, Entity/Use Code F represented both educational and religious organizations. 

This changes the definition of existing Entity/Use Code F and introduces a new Entity/Use Code:

  • New Entity/Use Code M (education organization) is available for selection and is calculating correctly.
  • Entity/Use Code F (religious organization)  is available for selection and is calculating correctly.

What this means for you

Several states have changed the exemption status of religious organizations, causing them to be different from the exemption status of educational organizations.

As a result, you need to update the Entity/Use code assigned to educational organization customers either on the customer record in your billing application and/or within the AvaTax Exemption Certificate Management System (ECMS).

  • Entity/Use code M for educational organizations is now available for selection and assignment and associated exemption rules are in effect.
  • Entity/Use code F  now only applies to religious organizations.

Any educational organization still assigned Entity/Use code may receive an inaccurate exemption assignment.