Sales Tax | Exemption Certificates
No certificate, no exemption. The tax becomes yours.
When you do not charge tax on a sale and cannot produce a valid certificate for it, the state does not go after your customer. It assesses you, for tax you never collected, on a sale from years ago. Certificates are held against the customer with their expiry, and an exempt sale to a customer without one is flagged when the invoice is raised.
What the system does
Capability, input, output.
| Capability | Input | Output |
|---|---|---|
| Certificate on the customer | Certificate collected at onboarding | Held against the customer record with its state, type and expiry |
| Block at invoice | An exempt-coded sale | Raised only where a valid certificate covers that state on that date, or flagged for review |
| Expiry tracking | Certificate validity dates | Renewal chased before the certificate lapses, not after a sale relied on it |
| Multi-state coverage | Customers buying into several states | Coverage tracked per state, since a certificate for one is not a certificate for another |
| Point-in-time evidence | A sale under audit | The certificate as it stood on the invoice date, not only the current one |
| Exposure view | Exempt sales with no valid certificate | The uncovered value, so the gap is a number rather than a worry |
-
Certificate on the customer
- Input
- Certificate collected at onboarding
- Output
- Held against the customer record with its state, type and expiry
-
Block at invoice
- Input
- An exempt-coded sale
- Output
- Raised only where a valid certificate covers that state on that date, or flagged for review
-
Expiry tracking
- Input
- Certificate validity dates
- Output
- Renewal chased before the certificate lapses, not after a sale relied on it
-
Multi-state coverage
- Input
- Customers buying into several states
- Output
- Coverage tracked per state, since a certificate for one is not a certificate for another
-
Point-in-time evidence
- Input
- A sale under audit
- Output
- The certificate as it stood on the invoice date, not only the current one
-
Exposure view
- Input
- Exempt sales with no valid certificate
- Output
- The uncovered value, so the gap is a number rather than a worry
Certificates FAQ
What buyers ask.
Our certificates are in a shared drive. Why is that not enough?
Because the question an auditor asks is not "do you have certificates", it is "show me the valid certificate covering this specific sale, in this state, on this date". A folder answers the first question. Certificates held against the customer record with their state and validity dates answer the second, which is the one that costs money.
Can it stop a sale going out untaxed without a certificate?
Yes, and that is the setting most teams end up on. An exempt-coded invoice to a customer with no valid certificate for that state is held for review rather than raised. It is a small amount of friction on the day and it is the difference between a clean audit and an assessment.
What about certificates that expired after the sale?
The certificate that matters is the one that was valid on the invoice date, so that is what is kept. Current status drives the renewal chase; the point-in-time position drives the audit answer. Systems that only hold the latest version lose the second one.
Do you validate that a certificate is genuine?
We hold, track and surface the certificate and its coverage. Whether a specific certificate is properly completed and accepted in a given state is a judgement your tax advisor should make, and the certificate types worth accepting vary. We would rather be plain about that boundary than imply a validation we do not perform.
We use a multi-state uniform certificate. Does that work?
It is recorded like any other, with the states it covers, and coverage is assessed per state on the sale. The reason coverage is tracked per state rather than as a single flag is exactly this case: not every state accepts every form, and a certificate covering most of your states is not the same as one covering all of them.
More in Sales Tax Compliance
Related features
See how many exempt sales have no certificate behind them.
Connect your books, free. Exempt sales are matched to the certificates covering them, and the uncovered value comes back as a number.