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

Environment

CertCapture

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) retains the existing exemption rules for education and will be updated on 4/1/2018. 

What this means for you

By March 31, you need to update the Entity/Use Codes on your account to adopt the changes provided above, and apply the correct taxability status to your exempt transactions or exempt customers within CertCapture. 

This may also require you to request updated exemption certificates from your customers who utilize Entity/Use Code M

During the month of March 2018:

  • Entity/Use Code M (education organization) is available for selection and assignment. Associated exemption rules are in effect
  • Entity/Use Code F (religious organization) retains the existing exemption rules 

On April 1, the F entity use code will change from exempt to taxable for these states:

  • Alabama
  • Arizona
  • Idaho
  • Iowa
  • Louisiana
  • Mississippi
  • North Dakota
  • Puerto Rico
  • South Dakota
  • Utah

To change Entity/Use codes in CertCapture

Review the certificates you have on file to see which ones are using the religious exemption.

  1. Sign into CertCapture and click Search > Certificate Search.
  2. Click the Advanced Search button to display additional filters.
  3. Under Certificate Exempt / Exposure Reasons, edit the Certificate has ANY of the following documented reasons to include Religious.
  4. Click Get Search Results.

All certificates currently using the Religious Org exempt reason are displayed. 

  1. Locate any certificate that needs to be updated to the Educational Org exempt reason.
  2. Click the Certificate ID to open that certificate's Details page.
  3. Click Edit and update the applied exempt reason to Educational Org, then click Update Certificate.
  4. Repeat the previous steps for each certificate in your search results that requires an update.

Do my existing exemption certificates need to be updated or replaced?

You do not need to replace older certificates as it should be applicable for Religious and Education, but if your customer is identified as an educational organization and the certificate is not clearly stated as educational, then you should request a new certificate.

I manage my exempt customers in my accounting/billing/ERP application. What action do I need to take?

For Educational organization customers, you must update the Entity/Use Code assigned to the customer record to "M - Educational Org" no later than March 31, 2018.