An exemption certificate provides information about the buyer or customer, and their tax status. The two most common reasons why a customer might be exempt from collecting sales tax are:

If they have a resale exemption certificate; or

If they have a direct pay certificate

In these cases, the seller must document the exemption certificate and be able to produce information about that certificate in the event of an audit. The AvaTaxCertificate APIs provide an easy way to manage exemption certificates.

When you create a certificate, Avalara processes it. After processing, you can then use the certificate when calculating transactions with tax exemptions. To use a certificate in calculating exemptions, you must include the following information in the CertificateModel:

An exposure zone indicating where the certificate is valid

A link to the customer who can use this certificate

The correct customer code for the exempt customer

When configured correctly, AvaTax will exempt transactions for the customer tied to this certificate when the transaction occurs in the specified zone.

Note:
Integrations that utilize Avalara Streamlined Sales Tax must have exemption certificates on file to exempt transactions.

The exemption certificate UI

In the B2B world, salespeople need to enter exemption certificates all the time. Make their user experience as easy as possible. Our goals are to:

Help the salesperson find the right customer record.

Tell the salesperson whether the customer has a certificate on file.
- If the salesperson can't find a certificate on file, we'll offer to send the customer a CertExpressInvite.
- If the salesperson wants to enter a Certificate while they're writing the sales invoice, your software can upload a PDF or JPG file directly to the UI.

Exemption certificates are commonly used in accounting software sales order entry, but are not often seen in a web storefront. A web storefront may want to provide a CertExpress link on their “Account Profile” page, for example.

Identifying exempt customers

When a merchant uses either Avalara's Exemption Certificate Management (ECM) or CertCapture to manage exempt customers, they must load the exemption information through the certificate UI. This information includes the customerCode and the customer exemption information from either ECM or CertCapture.

Upon receiving a transaction, AvaTax looks at the customerCode and compares that code to a listing of exempt customers within the application. If it finds a certificate on file, AvaTax next then determines whether that certificate is valid in the state where the transaction is taking place. If AvaTax finds a match, then that customer's certificate with be applied to the transaction.

If AvaTax doesn't find a certificate on file, you can send them an invitation to CertExpress.

CertExpress invitations

The CertExpress website offers a friendly, step-by-step method for reporting an exemption certificate. When you send an invitation to CertExpress, the customer making a purchase can visit the website on their own time and then upload an exemption certificate along with the necessary information.

Unfortunately, if the customer doesn’t respond to the CertExpress invitation quickly enough, the certificate won’t be available when they make a purchase.

To send a CertExpress invitation to a customer, call CreateCertExpressInvitation, and specify whether you want an email, download, or facsimile invitation. You can check the status of an invitation or load an invitation you created previously by calling ListCertExpressInvitations.

When creating a CertExpress invitation, you can select a cover letter from the available list of prebuilt cover letters. A cover letter will make an email or facsimile invitation more readable to a customer. You can either choose the value STANDARD_REQUEST, or call the ListCoverLetters API for a list of available prebuilt cover letters.

You can also optionally display the hyperlink from the CertExpress invitation directly in your UI. This allows a salesperson or customer to click the link and jump directly to the friendly introduction page on CertExpress so that they can begin uploading an exemption certificate directly.

Note that CertExpress invitations take a few moments to build a custom welcome page for your customer. When you create a CertExpress invite, check the status value of the result. If the value says “InProgress,” the welcome page is being built. Wait for a few seconds and fetch back the invitation using GetCertExpressInvitation before the URL will be ready.