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How exemptions are recorded

A tax-exempt customer (resale, government, non-profit) shouldn’t be charged US sales tax — but the sale still needs to be recorded as exempt for your liability report and audit trail. Recurso stores the exemption on the customer and passes it through to your tax provider rather than silently skipping tax: the provider returns zero and logs an exempt sale, and the invoice line is marked sales_tax_exempt (distinct from a no-nexus $0 line).
This assumes US sales tax is already set up — see Set up US sales tax end-to-end for the provider and nexus configuration.

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Prerequisites

  • US sales tax configured with Avalara or TaxJar — the exemption passes through to the provider.
  • The customer’s exemption certificate number and the provider entity-use code.
  • An API key for the API call below, or dashboard access.

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Step 1: Record the exemption on the customer

Set three fields on the customer: the exempt flag, the certificate number, and a provider entity-use code. In the dashboard, open the customer and toggle Tax exempt (US), then enter the number and code. Or via the API:

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Step 2: Choose the right entity-use code

The entity-use code is what tells the provider why the buyer is exempt and makes it zero-rate the line:
  • Avalara uses entity-use codes such as A (federal government), E (charitable), G (resale). Set the code your provider expects.
  • TaxJar maps the code to its exemption categories (wholesale, government, other) — a resale code becomes wholesale, and anything unrecognized falls back to other (still exempt).
An exemption is only as good as the certificate behind it. Keep the certificate number accurate and on file — the provider records it against the transaction.

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Step 3: Invoice the customer

At invoice time the exemption is passed to the provider. The result:
  • Tax comes back 0.
  • The line’s tax_type is sales_tax_exempt.
  • The provider records an exempt transaction on its side.
  • The exempt lookup bypasses the rate cache, so one exempt buyer never affects another buyer’s rate in the same jurisdiction.

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Verify your setup

1

The customer shows exempt

The customer detail view shows Tax exempt: Yes with the number and code.
2

The invoice collects 0 and is marked exempt

An invoice for the customer has tax_amount: 0 and a note that records the exemption (exempt sale (code A) — cert RESALE-0001).
3

It shows as exempt in the liability report

The liability report counts the sale under exempt, separate from non-taxable (no-nexus / below-threshold).

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Next steps