What is a sales tax exemption?


A sales tax exemption is when a purchaser can legally make a tax-free purchase with the help of an exemption certificate. This certificate documents the exemption the purchaser claims to make a tax-free purchase. Some common exemptions exemption certificates you can upload in Anrok are:

  • Multiple Points of Use Exemption — A document granted for certain items or services that will be used at multiple locations or for multiple purposes. This exemption allows the purchaser to pay a reduced sales tax rate based on the anticipated multiple uses or locations.
  • Non-Profit Exemption — A document issued to qualifying nonprofit organizations by a governmental authority, such as the Internal Revenue Service (IRS). This certificate exempts the organization from certain taxes that would otherwise apply to for-profit businesses.
  • Resale (Reseller) Exemption — A document that proves to the seller that the buyer is a legitimate reseller and eligible for sales tax exemption. Reseller purchases are generally tax-exempt because the ultimate consumer will pay sales tax when they purchase the product.

The purchaser is responsible for determining whether they are making an exempt purchase and adequately completing the exemption certificate. Upon purchase, the seller reviews the exemption certificate. When completed properly, the seller can accept the certificate in good faith. In Anrok, this exemption certificate can be added to the customer's profile to prevent Anrok from calculating tax. See Upload an exemption certificate.

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The retailer must charge and remit a sales tax if the customer does not provide a valid exemption certificate. Sellers have the burden of providing proof to support any non-taxed sales when audited, in which auditors may instruct a seller to provide copies of exemption certificates. Therefore, without an exemption certificate, the seller must charge and remit sales tax.

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