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 using basic tax or automatically.

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 using basic tax without this feature.

Creating the Customer Group

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, go to Customers › Customer Groups and click Manage Default Customer Groups. In the Default group for guest customers drop-down menu, select your default retail customer group. This will ensure that guest checkouts are properly taxed.

Create a new group for tax-exempt customers, and assign the appropriate customer accounts to this new group. In our example, we named it Tax-Exempt.

Adding Customer Groups to Tax Zones

To add a customer group to a tax zone with rate, go to Settings › Tax and click on Edit in the Set up your own tax rules section. Edit any Tax Zones the tax-exempt customers may be part of, enable Only customers in these groups, and select the customer groups that do not contain the non-taxable group. This ensures that by default, only the non-taxable customer groups are included in the tax zone and will be charged tax.

Repeat for all Tax Zones.

If you are using a tax provider to automatically calculate sales tax in your store, you can manage tax exemption from within your tax provider's admin area.

To make a tax-exempt customer, go to Customers › View and click on a customer's name to edit their information. Then enter the appropriate entity/use letter code into the Tax Exempt Code field and Save your changes.

Are there other methods for creating tax-exempt customers using an automatic tax provider?

If you are using Avalara AvaTax as your tax provider, you can import customer profiles to your Avalara AvaTax account and apply exemptions to them. This can provide you more control over which regions your customers have tax exemption. For more information, see Create BigCommerce customers in AvaTax and Exempt customers from tax from Avalara's Knowledge Center.