Many organizations mistakenly believe that an IRS determination letter—such as a 501(c)(3) designation—is sufficient documentation to claim a sales tax exemption. While this letter can confirm federal tax-exempt status, it does not necessarily establish an exemption from state or local sales taxes.

Sales tax in the U.S. is governed by individual states and local jurisdictions, each with its own laws and documentation requirements. In most cases, a separate valid state-issued sales tax exemption certificate is required to verify eligibility.

Additionally, in some states, even organizations that are federally tax-exempt under Section 501(c)(3) may not qualify for a sales tax exemption. To clarify, state-issued exemption certificates typically include essential details such as the exemption category, reason for exemption, and a state-issued exemption ID number.

Submitting only an IRS determination letter or other federal documentation—without the appropriate state or local exemption certificate—is generally insufficient and may result in a denial during certificate review in EXEMPTAX.

If you're unsure which certificate to provide, we recommend reviewing our system workflows, contacting the relevant state tax authority, or consulting a qualified tax advisor for further guidance pertaining to your specific tax situation.