Sales Tax 101 TaxJar

You can Now Designate Tax Exempt or Wholesale Transactions in TaxJar

by Alec Carper

Set a tax exempt transaction in TaxJar

Lately we’ve been working hard to help your TaxJar account reflect the way you do business. Today we’re happy to announce that you can now designate individual transactions as “tax exempt” in TaxJar.

This means that your TaxJar “Expected Sales Tax Due” report will be even more accurate, and you can now more easily AutoFile your sales tax returns without running into any roadblocks.

Exempt Transactions in TaxJar

Many online sellers make sales at wholesale, or to exempt customers such as resellers, government entities or educational institutions.

Before this new feature, if our customers sold a taxable item to a tax-exempt buyer, we had no way of knowing that our customers were correct in not charging sales tax on that item. With this new feature, you can mark a transaction as “exempt” one time, and TaxJar will recognize that you were correct in not charging sales tax on that transaction.

How do I designate exempt or non-taxed transactions in TaxJar?

You can designate exempt or non-taxed transactions in your “Transactions” tab in TaxJar.

  1.     Navigate to your Transactions Tab
    Transactions Tab TaxJar
  2.     Choose the plus sign next to the exempt transaction
    How to choose tax exempt transactions in TaxJar
  3.     Information about the transaction will appear on screen as a popup. Scroll down to the bottom of the order and you’ll see “Is this receipt exempt?”
    Setting Tax Exempt Transactions in TaxJar
  4.     Choose the reason your transaction is exempt
    Transactions Tax Exemptions in TaxJar

Now, TaxJar will know that that order was untaxed because the transaction is tax exempt.

Your TaxJar “Expected Sales Tax Due” reports will also be accurate. For example, this TaxJar customer sold items to a tax exempt school in Massachusetts. Before she designated that transaction as tax exempt, Massachusetts showed as a yellow “caution” state on her TaxJar dashboard.

Massachusetts State Sales Tax Report in TaxJar

But once she designates the sale to her Massachusetts customer as tax exempt, her TaxJar dashboard will reflect that she’s collecting sales tax correctly and the yellow “caution” warning will turn green.

Using TaxJar AutoFile with Tax Exempt Transactions

In the past, if you had tax exempt transactions and attempted to enroll in AutoFile, you would run into a roadblock asking you to treat all sales as taxable. Now that you can designate tax exempt, resale and wholesale transactions in TaxJar, you can bypass this roadblock and AutoFile only the sales tax you collected.

Find out more about enrolling in AutoFile here.

Do you have questions or something to say about designating tax exempt, wholesale or resale transactions in TaxJar? Start the conversation in the comments!

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