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How do I set up a partial exemption for customer located in California?

Overview

You want to know how to set up a partial exemption for the state of CA.

Environment

Avalara AvaTax

Resolution

  • AvaTax has two exemption reasons that cover California partial exemption rules
  • If you have a partial exemption related to Teleproduction, please follow these steps:
    • AvaTax does not by default apply this tax rate through tax codes or Entity Use Code partial exemptions
    • To set up this functionality, tax rules will need to be set up.
      • First create a Rate Override tax rule that sets the CA State tax rate to 1.25%
  • The example shows the Entity Use Code of I)Industrial production / manufacturing, but it would be best to use a custom Entity Use Code, for example X
    • Using a preexisting Entity Use Code will require another rule that sets that EUC to taxable in California
    • If you need certain tax codes to apply to this tax rule, please change the Tax Code field to the specific tax code(s)
  • Once the state rule has been created, you will need to add the selected Entity Use Code to the Customer Card in your accounting system, or create an exemption certificate entry in the Admin Console.

Next steps

For more information, read exempt customers from sales tax.

 
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