Chapter 4.3.4 - Exemptions

Exemptions remove tax liability from a jurisdiction. An exemption should be used when you have an exemption certificate that allows you to be exempted from certain taxes for a given jurisdiction or group of jurisdictions.

Communications REST v2 provides different types of exemptions:

Type Description
Category Exemption Exemptions applied by tax category
Provide the Category ID (cat) and the location (loc)
Tax Type Exemption Exemptions applied to a specific tax type, tax level, and jurisdiction (if needed)
Provide the tax type (tpe) and tax level (lvl). Specify the location (loc) if applicable to a specific jurisdiction.
Jurisdiction Tax Rule Exemption Exemptions applied automatically by the AFC Tax Engine based on characteristics of the transaction


Category exemptions and tax type exemptions can’t both be included within the same single exemption, but can be applied simultaneously within a list of exemptions.

For more information, see Exemptions.

Exemption fields

Exemption fields by exemption type:

Field Category Exemption Tax Type Exemption
Tax Type (tpe) X
Category ID (cat) X
Jurisdiction (loc) X X
Exempt Non-Billable (exnb) X X
Scope (scp) X X
Domain (dom) X X
Force Level Exemptible (frc) X

For more information, see Exemptions.

Scope

Scope (scp) defines the tax levels in which the taxes will be considered as candidates for exemption. The field is a combination of one or more of these values (add the appropriate values together):

  • 128: Federal
  • 256: State
  • 512: County
  • 1024: Local

For example:

Scope Description
1920 All (Federal + State + County + Local)
1792 State + County + Local
384 Federal + State
128 Federal


Domain

Domain (dom) defines the level at which the taxing jurisdiction much match the exemption jurisdiction. The domain does not need to correlate to the tax level of the tax being exempted.

The domain is set to one of these values:

  • 0: Federal
  • 1: State
  • 2: County
  • 3: City

For example:

Domain Exemption Location Taxing Jurisdiction Result
Federal (0) New York, NY, USA San Francisco, CA, USA Exemption applied
New York and San Francisco are in the same country so they match at the federal level
Federal (0) New York, NY, USA Toronto, ON, Canada Exemption not applied
New York and Toronto are in different countries so they don't match at the federal level
State (1) New York, NY Ithaca, NY Exemption applied
New York and Ithaca are in the same state so they match at the state level
State (1) New York, NY San Francisco, CA, USA Exemption not applied
New York and San Francisco are in different states so they don't match at the state level
County (2) Fort Lauderdale, Broward County, FL Hollywood, Broward County, FL Exemption applied
Fort Lauderdale and Hollywood are in the same county so they match at the county level
County (2) Fort Lauderdale, Broward County, FL Miami, Dade County, FL Exemption not applied
Fort Lauderdale and Miami are in different counties so they don't match at the county level
Local (3) Fort Lauderdale, Broward County, FL Port Everglades, Broward County, FL Exemption applied
Port Everglades is part of Fort Lauderdale and they have the same PCode so they match at the local level
Local (3) Fort Lauderdale, Broward County, FL Hollywood, Broward County, FL Exemption not applied
Fort Lauderdale and Hollywood are different local jurisdictions so they don't match at the local level


Exempt Non-Billable

Exempt Non-Billable (exnb) defines if non-billable taxes can be exempted.

  • true: Non-billable taxes can be exempted
  • false: Non-billable taxes cannot be exempted

Force Level Exemptible

The Force Level Exemptible flag (frc) override level exempt flag on wildcard exemptions

  • true: Wildcard exemptions exempt taxes tagged as not level exemptible
  • false: Wildcard exemptions exclude taxes tagged as not level exemptible from consideration

Jurisdiction Tax Rule Exemption

A Jurisdiction Tax Rule Exemption is applied automatically based on the taxing jurisdiction and the taxes returned. For example:

  • First $25 of a Texas Internet transaction
  • Safe Harbor Override applied to VoIP or Cellular transactions

Exemption Example

This example demonstrates:

  • "Sales and Use" category (cat is 1) exemption within North Carolina
  • Tax type 44 (tpe is 44) exempted with a domain of State(dom is 1)
{
  "cmpn": {
    "bscl": 1,
    "svcl": 0,
    "fclt": true,
    "frch": true,
    "reg": false
  },
  "inv": [
    {
      "bill": {
        "ctry": "USA",
        "st": "NC",
        "city": "Durham",
        "zip": "27701",
        "int": true
      },
      "cust": 1,
      "lfln": false,
      "date": "2018-02-01T12:00:00Z",
      "exms": [
        {
          "loc": {
            "ctry": "USA",
            "st": "NC"
          },
          "cat": 1
        },
        {
          "loc": {
            "pcd": 2757800
          },
          "tpe": 44,
          "dom": 1
        }
      ],
      "itms": [
        {
          "ref": "Exemption Example",
          "chg": 100,
          "line": 0,
          "sale": 1,
          "incl": false,
          "tran": 13,
          "serv": 6,
          "dbt": false,
          "adj": false
        }
      ],
      "invm": true,
      "dtl": true,
      "summ": false
    }
  ]
}

Response

Tax Type (tid) 231 is exempted because of the category exemption. Tax Type (tid) 44 is exempted because of the tax type exemption.

View the Response JSON
{
  "inv": [
    {
      "itms": [
        {
          "ref": "Exemption Example",
          "txs": [
            {
              "bill": true,
              "cmpl": true,
              "tm": 0,
              "calc": 1,
              "cat": "SALES AND USE TAXES",
              "cid": 1,
              "name": "North Carolina Telecommunications Sales Tax",
              "exm": 100,
              "lns": 0,
              "min": 0,
              "pcd": 2716900,
              "rate": 0.07,
              "sur": false,
              "tax": 0,
              "lvl": 1,
              "tid": 231
            },
            {
              "bill": true,
              "cmpl": true,
              "tm": 0,
              "calc": 2,
              "cat": "CONNECTIVITY CHARGES",
              "cid": 5,
              "name": "Telecom Relay Surcharge (Wireless)",
              "exm": 0,
              "lns": 0,
              "min": 0,
              "pcd": 2716900,
              "rate": 0.1,
              "sur": true,
              "tax": 0.1,
              "lvl": 1,
              "tid": 175
            },
            {
              "bill": true,
              "cmpl": true,
              "tm": 0,
              "calc": 2,
              "cat": "E-911 CHARGES",
              "cid": 7,
              "name": "E911 (Wireless)",
              "exm": 0,
              "lns": 0,
              "min": 0,
              "pcd": 2716900,
              "rate": 0.6,
              "sur": false,
              "tax": 0,
              "lvl": 1,
              "tid": 44
            },
            {
              "bill": true,
              "cmpl": true,
              "tm": 37.1,
              "calc": 1,
              "cat": "CONNECTIVITY CHARGES",
              "cid": 5,
              "name": "Fed USF Cellular",
              "exm": 62.9,
              "lns": 0,
              "min": 0,
              "pcd": 0,
              "rate": 0.195,
              "sur": false,
              "tax": 7.234500000000001,
              "lvl": 0,
              "tid": 55
            },
            {
              "bill": true,
              "cmpl": true,
              "tm": 100,
              "calc": 2,
              "cat": "REGULATORY CHARGES",
              "cid": 6,
              "name": "FCC Regulatory Fee (Wireless)",
              "exm": 0,
              "lns": 0,
              "min": 0,
              "pcd": 0,
              "rate": 0.016667,
              "sur": false,
              "tax": 0.016667,
              "lvl": 0,
              "tid": 170
            }
          ]
        }
      ]
    }
  ]
}

See Category Exemptions and Tax Type Exemptions for more examples.

Note

We recommend using a client profile with an exemption file included were possible. Using a client profile results in better performance from the Tax Engine because your exemption settings are cached before tax calculation begins.

See Also

Input Objects

Output Objects

Helpful Pages