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How do I make my customer tax exempt in QuickBooks?

Overview

How can I make a customer tax exempt in QuickBooks, using the AvaTax for QuickBooks software?

Environment

QuickBooks

Resolution

  • Depending on how you use QuickBooks to manage your customers, there are several different ways you can manage the exempt status of your customers:
    • Using the Exemption Number field: This field is available on the customer record in QuickBooks. Sending any value in this field, will flag the transaction as tax exempt.
      • This may be the easiest of the methods, and, if it best fits your business practice, is fine to use, but the more information AvaTax has about why a customer is exempt will allow for more subtle tax calculations.
      • Keep in mind that you’ll need both an exemption number populated (in Customer>Additional Info>Resale Number) AND the tax code needs to be set to NON.
        • If only one of these is true, the flag will be ignored.
        • The Resale Number field is only exposed on parent customer records, but it is available for manipulation through export and import of customer records through QuickBooks.
    • Using the Entity/Use Code field: This is a field that is available at the customer level,
      • This method allows you to exempt a transaction by passing a pre-coded exemption reason (e.g. G for Resale), or by creating custom reasons with custom exemption profiles.
      • This is especially useful for partially-exempt customers.
      • This value is stored on the customer card under Additional Info > Customer Usage Type.
      • Steps to enable this feature and set up the exemption are located here.
    • Using the AvaTax ECMS: This is a certificate management tool available to all customers on the Admin Console.
      • Certificates are imported to the Admin Console directly, as placeholder records for a real certificate maintained by you.
      • Certificates are matched to customer codes (and states applicable, and date ranges) on tax calculation, and transactions are exempted where appropriate.
        • If you use the Jobs functionality of QuickBooks, note that the customer code we receive for a job is different than that of the parent company (it comes to us in the format Customer: Job).
        • You would need to create exemption certificates for each applicable job.
      • ​See full guide here.
    • Using Avalara CertCapture: This is an add-on product that independently manages your exemption certificates.
      • It allows you to store certificate images, send certificate requests to your customers (individually or in batches), and allows your customers to fill out certificate information directly through a wizard, which results in an actual certificate.
      • Certificates are matched to customer codes (and states applicable, and date ranges) on tax calculations, and transactions are exempted where appropriate.