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Making Customers Tax-Exempt

In some situations, you may need to offer a tax exemption to a portion of customers, such as government agencies or nonprofit organizations. 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 (with Avalara AvaTax).

 

How do I know if a customer should be tax exempt? Typically, organizations need to provide documentation attesting to their tax-exempt status. Check with a local tax professional regarding rules and regulations surrounding tax exemptions before enabling tax-exempt customer groups on your store. BigCommerce support is unable to offer tax advice.

 
 

Manually Creating Tax-Exempt Customers

To mark a customer account as tax-exempt, you will create a customer group, edit your tax zone to exclude that customer group from taxes, and add any tax-exempt customer accounts to that customer group.

Creating a tax-exempt group of customers requires the customer group feature, which is only available on select BigCommerce plans. You will not be able to set up a tax-exempt group manually without this feature.

Creating the Customer Group

1. If you don’t already have customer groups created for your store, create a default customer group for normal retail customers. If you allow guest checkouts, set Customer Group for Guests drop-down menu to your default customer group. This will ensure that guest checkouts are properly taxed.

2. Create a new group for Tax-Exempt, which won’t be taxed. In this example we named it Tax-Exempt.

Customer Group for Guests

3. Assign the appropriate customer accounts to the Tax-Exempt group.

Adding Customer Groups to Tax Zones

1. Go to Store Setup › Tax and click the Tax Rates & Zones tab.

2. Click Action › Edit Settings on any Tax Zones the tax-exempt customers may be part of.

3. Scroll to Tax Zone Applies to, select Only customers in these groups.

Tax Zone Applies to

4. Select the Retail group and click Save. Repeat Steps 5 - 7 for any additional Tax Zones this applies to.

 
 

Creating Tax-Exempt Customers with Avalara AvaTax

If you are using Avalara AvaTax to automatically calculate sales tax in your store, you can manage tax exemption from within your Avalara Account. Avalara has a few ways to track tax exemption such as, AvaTax Exemptions and CertCapture.

See Who You Exempt on Avalara’s help center for more information about these products.

1. On BigCommerce, go to CustomersView and Click on a customer’s name to edit their information.

2. For Tax Exempt Category, enter the appropriate customer type letter code or category name. Category names are defined in your Avalara control panel.

Tax Exempt Category

3. Save your changes.

Tax Exempt Category Codes

A - Federal government (United States)

B - State government (United States)

C - Tribe / Status Indian / Indian Band (both)

D - Foreign diplomat (both)

E - Charitable or benevolent org (both)

F - Religious or educational org (both)

G - Resale (both)

H - Commercial agricultural production (both)

I - Industrial production / manufacturer (both)

J - Direct pay permit (United States)

K - Direct mail (United States)

L - Other (both)

M - Not Used

N - Local government (United States)

O - Not Used

P - Commercial aquaculture (Canada)

Q - Commercial Fishery (Canada)

R - Non-resident (Canada)

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