# Understanding exemptions

Source: https://developer.avalara.com/avatax-dm-combined-erp/sales-tax-badge/transactions/exemptions/

# Understanding exemptions

**Advice:** This section describes information that you need to know about exemptions in order to become a certified technology partner. If you still have questions about exemptions after reviewing this section, refer to the [Exempt customers FAQ](https://knowledge.avalara.com/bundle/vmo1663598298880_vmo1663598298880/page/Can_Avalara_Exempt_customers_by_Address.html) in the Avalara Knowledge Center.

An exemption refers to the reason that certain transactions are not taxed. In order to understand exemptions, you will need to understand the following:

-   All the factors that could cause tax on a transaction to be zero
-   How to set up exemption certificates for customer exemptions
-   How to use exemption numbers to exempt transactions
-   How to define entity use codes to exempt entire transactions or lines on a transaction

Each of the above items is described in greater detail in the sections that follow.

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