While uncommon, there may be certain business scenarios where your customers can claim a variety of different tax exemption reasons in a single jurisdiction.
For instance, let's say your customer has a division A that buys supply X from you using a manufacturing exemption certificate, and has another division B where they buy supply Y for resale.
In this case, to minimize compliance issues it's important to collect multiple exemption certificates from the same customer in the same state. To facilitate collection and reconciliation of exemption certificates by exemption reason in EXEMPTAX, one may do so following the steps below:
1. From the app header, navigate to your company settings (limited to administrators).
2. Navigate to Exposure Management.
3. Once you're there, you will see two options, "Update Customer Level Exemption Reason" and "Update Shipping State Level Exemption Reason".
The first option Update Customer Level Exemption Reason in EXEMPTAX when enabled will update the customer record's default exemption reason based on the exemption reason of the last processed certificate.
The second option Update Shipping State Level Exemption Reason will update the customer records exemption level at a state level (say for instance your customer is a reseller in California, but a manufacture in New York) for each state based on the last processed certificate.
When either option is disabled, the system will ignore an exemption certificate from exposure perspective if that certificate doesn't meet the expected exemption reason for that customer. So for instance, if your Customer X is configured as a Reseller in Iowa, but sends you an Agricultural Exemption Certificate, the exposure for a missing certificate for Customer X will not go away, as the system is expecting a resale certificate for that state.
This situation can also be complicated by other external exemption configuration settings in external accounting and ERP systems, as exemption reason management in such systems may require additional offline handling. If you'd like additional support with this area, please contact us via your account representative or through a support ticket so that we can provide you personalized support for the edge cases (both from a tax and software process perspective) that can be present in this area.