Sales Tax Exemption -- Still posting sales tax on invoice?

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Posted on by gfadden400

Is there any additional setup to exempt a customer from sales tax? We have a customer in which we have specified a tax exempt number in Customer Details > Invoice and Delivery, but when invoicing a sales order or any other invoice document, tax is still calculated and charged.

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André Arnaud de Cal... 304,711 Super User 2026 Season 1 on at

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Hi,

You need to create a Tax group specific for exemption. When you link the Tax codes on this Tax group, you have to option to enable the option Exempt. Note that this is for the Sales side. The purchase exempt sales tax is managed by enabling the option 'Use tax'.

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gfadden400 on at

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Thanks Andre, This works exactly as intended when invoicing directly to that customer. However, when you make use of the "Invoice Account" setting to specify that an invoice for a location should roll up to a "master" billing account, setting the exempt tax group on that billing account still results in tax being calculated. The scenario we have to account for frequently is that we have several thousand locations we service for one invoice customer. The tax exemption sits on the invoice customer, not the service locations. Any thoughts on dealing with that scenario where the customer being invoiced is not the same as the service location?

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André Arnaud de Cal... 304,711 Super User 2026 Season 1 on at

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Please check if the correct or a wrong tax group is copied to the sales header and the lines. as you are probably located in the US, the regulations might be different in the EU.

The sales tax group copied to the sales header/lines is used for the tax calculation. So probably somehow a wrong code is retrieved. You can check by specifying field by field when the sales tax is changed to a wrong value.

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Daxer Persson 3,005 on at

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The sales tax group on a sales order comes from the customer account (not the invoice account). So your many locations (which I understand are created as customers and linked to the invoice account) needs change of the setting of the sales tax group (blank or a sales tax group with exempt code ?).

The Tax exempt number is "just the customers VAT number" for various reports. There is no functionality as such related to this.

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