In some situations, you may need to offer tax exemption to a portion of customers (government agencies, resalers, b2b sales, etc). To prevent your store from charging taxes on these customers, you will need to mark the customer as tax-exempt.

The process for making specific customers tax-exempt will differ depending on whether you have set taxes up manually or automatically.

Automatical tax-exempt feature is supported in Avalara AvaTax and VAT/ GST Addon. It also can be added by a special Tax Exempt Addon that expands the tax-exempt feature with a possiblity to add a tax-free option to some products or groups of products (nessecity goods, digital goods, services, etc.).

To set up a tax-exempt option manually you’ll need to:

  1. Create a special tax-exempt membership and assign it the customers that can order goods tax free - See more info on memberships creation in Managing User Membership Levels

    You will need to divide all your customers into groups and assign a special membership level to each of the groups depending on whether the customer is tax-exempt or not.

  2. Create the store tax system based on the memberships - See more info on the setup of taxes in Setting up Sales Tax

    When setting up taxes disable the Use the same tax rates for all user membership levels option and create tax rates based on the memberships used in the store. The tax-exempt membership should have a 0% tax rate applied.