Configure tax exempt customers

Some customers—such as resellers, government agencies, and nonprofits—may be legally exempt from paying sales tax. Tax-Exempt Billing Accounts make it easy to support these customers by automatically removing taxes during checkout, POS sales, and Salesforce order processing.

Tax-exemptions typically apply to Government entities, nonprofits, and organizations with a valid tax exemption status. Exemptions may also apply to B2B customers and resellers. Tax exempt transactions can occur at web checkout, point of sale (POS), and for Salesforce order tax calculation tools and automations.

When StoreConnect calculates tax itself, the tax exempt feature:

• Skips tax calculations completely

• Removes all tax line items from carts and orders

• Ensures tax totals are $0

• Adjusts pricing when tax is included in the product price

:::warning If your store uses an external tax provider, this works differently. StoreConnect does not remove tax itself. On a storefront order it sends the customer’s tax entity code to the provider, and the provider decides whether to exempt the sale. At POS the tax entity code is not sent, so a tax-exempt account is charged the provider’s tax. A tax entity code on the account is not a guarantee of a $0 total. See When an external tax provider is connected below. :::

Set a tax entity code for an account

To ensure all transactions associated with an account are marked as tax-exempt, you need to select a Tax Entity Code (tax_entity_code)for the customer account.

1. Open the customer account record.
2. Select a valid Tax Entity Code.
3. Select Save.

No additional configurations are required in your store.

Exemption logic

An account is tax-exempt when Tax Entity Code is set to any value other than TAXABLE (the check is case-insensitive — "taxable", "Taxable", and "TAXABLE" all mean the same thing).

An account remains fully taxable if:

• Tax Entity Code is blank (no value selected).
• Tax Entity Code is set to TAXABLE (case-insensitive).

Tax Entity Code values

The following values are available in the Tax Entity Code picklist:

Value	Description
a	Federal Government
b	State Government
c	Tribal Government
d	Foreign Diplomat
e	Charitable/Exempt Organization
f	Religious Organization
g	Resale
h	Agriculture
i	Industrial Prod/Manufacturers
j	Direct Pay
k	Direct Mail
l	Other/Custom
m	Educational Organization
n	Local Government
p	Commercial Aquaculture
q	Commercial Fishery
r	Non-Resident
taxable	Non-Exempt Taxable Customer

Tax exempt transaction behavior

Web checkout

When a tax-exempt billing account is linked to a cart and StoreConnect is calculating the tax:

• taxes are removed entirely.
• product tax records are cleared.
• tax totals become zero.

If pricing is tax-inclusive (tax already included in the price), the system will reverse the included tax so the customer pays the true pre-tax amount.

If an external tax provider is connected to the store, none of the above applies to web checkout. The provider returns the tax and StoreConnect uses what it returns. See When an external tax provider is connected.

Example: A product priced at $110 including 10% tax becomes $100 for a tax-exempt customer.

Point of sale (POS)

When a tax-exempt account is linked to a POS cart and no tax provider is set for the POS channel:

• taxes are cleared from cart items.
• the cart updates immediately to reflect exemption status.
• if the customer is removed, taxes return automatically.

Returned items (negative quantity) also get their tax updated, but the item price is not recalculated.

If a tax provider such as AvaTax is set for the POS channel (the provider’s Channels include POS), the provider’s tax applies instead. See when an external tax provider is connected.

Salesforce orders

When tax is calculated in Salesforce (via button action, flow, or Apex):

• exempt accounts bypass tax logic entirely.
• order item tax values are removed.
• totals become zero.

If pricing is tax-inclusive, Salesforce order prices may be adjusted to remove embedded tax, so the final unit price reflects the correct pre-tax value.

The Salesforce tax calculator interface displays:

• an Exempt badge when tax is zero.
• a warning if an order changes from exempt to taxable (especially for tax-inclusive pricing).

Guest checkout

If a guest enters an email address that matches an existing Salesforce contact linked to a tax-exempt account, the cart will automatically use that account and apply exemption, even if the customer does not sign in. If a customer starts checkout as a guest and later signs in, exemption is re-evaluated when customer info is resubmitted.

When an external tax provider is connected

If your store has a tax provider connected (see Avalara AvaTax), that provider calculates the tax and StoreConnect does not apply its own exemption logic.

On a storefront order, StoreConnect:

1. Reads Tax Entity Code from the billing account on the cart.
2. If it is set to anything other than taxable, sends it to the provider as the entity use code for that transaction.
3. Uses whatever tax amount the provider returns.

StoreConnect does not zero the tax, clear tax line items, or override the provider’s answer.

:::warning Known issue: POS sales to tax-exempt accounts are charged tax when a tax provider is set for the POS channel. The register does not send the account’s Tax Entity Code to the provider. It sends the customer’s code (or POS_GUEST when no customer is attached), leaves out only lines that are tax exempt on the price book entry or price book, and applies whatever tax the provider returns. When the provider records invoices (the default), the invoice for the completed sale also records it as taxable, so this affects your tax reporting as well as the receipt. Until this is resolved, a POS sale is exempt only if the provider holds an exemption certificate matched to the customer’s code. A sale with no customer attached cannot match a certificate. :::

Why a coded account can still be charged tax

On a storefront order, the provider decides whether an entity use code actually exempts a given sale. Two customers with the same tax entity code can be treated differently, and that is the provider behaving correctly rather than a fault in your store. Common reasons:

• The destination state does not grant that exemption. Entity use codes are applied per jurisdiction under each state’s own rules, so the same code can exempt a sale shipping to one state and not another.
• No exemption certificate is on file with the provider for that customer in that jurisdiction. Many states require a registered certificate before an exemption is honored.
• The code was added after the order was placed. The code is read at checkout, so orders placed beforehand were sent as taxable and will not change retrospectively.

Where to look when tax was charged unexpectedly

Work through these in order:

1. Check whether the sale was made at POS. If it was, see the known issue in When an external tax provider is connected.
2. Check the order date against when the code was set. Orders placed before the account was coded were correctly treated as taxable.
3. Compare against another order in the same state. If other exempt accounts shipping to that state are also being taxed, the question is whether the provider grants that exemption there.
4. Check the customer’s exemption certificates in your provider’s own console, for the company code the store is configured with.
5. Turn on request logging if you need to see exactly what was sent. Add log_requests: true to the tax provider’s Configuration Options, then place a test order and read the Tax Provider Log records. Logging is off by default, so nothing is recorded until you enable it.

:::warning Setting a tax entity code in Salesforce does not create an exemption certificate with your tax provider. Those are managed in the provider’s own system and the two are configured separately. :::

Tax exempt transaction limitations

This feature does not support:

• partial exemptions (exempt from some tax types but not others).
• per-product or per-category exemptions.
• tax certificate storage or validation. Certificates live in your tax provider, not in StoreConnect.
• auditing or logging of exemption usage.

Tax exemption is all or nothing: the account is either fully taxable or fully exempt.

If an order switches from exempt back to taxable and uses tax-inclusive pricing, the system warns the cashier or user to verify pricing before recalculating taxes.