Mark a customer tax-exempt in QuickBooks Desktop
Some customers — resellers, nonprofits, government buyers — don't pay sales tax. The TaxCloud QuickBooks Plugin reads QuickBooks' built-in customer tax setting and tells TaxCloud when a customer is exempt, so their sales come back at $0 tax automatically. This article covers how to mark a customer exempt and how their exemption certificates are recorded.
How customer exemption works
QuickBooks Desktop gives every customer a Tax Code with two built-in values:
- Tax — the customer pays sales tax.
- Non — the customer does not.
The plugin reads this field on every transaction. When a customer is set to Non, it sends an exempt flag to TaxCloud, which then:
- Returns $0 tax on the sale, and
- Still records the sale for filing — most states require you to report exempt sales even though no tax is due.
Set a customer to Non once, and every future transaction for them is zeroed out automatically.
Mark a customer exempt
- Go to Customers → Customer Center.
- Double-click the customer to open their record.
- Open the Sales Tax Settings tab.
- Set Tax Code to Non.
- (Optional) Enter their Resale Number for your own records. The plugin doesn't send this to TaxCloud, but it's useful at audit time.
- Click OK.
:::info Already have open invoices for this customer? Invoices saved while they were set to Tax keep their original tax. Open each one and click Save again — the plugin recalculates against the new exempt setting and removes the tax line.
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What the exempt setting covers
The Non flag is all-or-nothing: it applies to every transaction the plugin syncs (invoices, sales receipts, credit memos) and zeroes out every line. It does not handle:
- Per-state exemption — a reseller exempt in California but not New York.
- Per-reason exemption — resale vs. nonprofit vs. government.
- Per-product exemption — exempt on some items but not others (that's a product-taxability question — see Assign product tax codes (TICs)).
For anything more nuanced than "this customer never pays tax on anything," use a certificate-managed exemption in the TaxCloud dashboard (below).
Need tax to apply for just one sale or state?
- Temporarily switch the customer's Tax Code to Tax, save the transaction, then switch back. The plugin reads the current value at save time.
- Or use a separate customer record (e.g. a "Walk-in Customer" set to Tax) for those sales.
Exemption certificates in TaxCloud
An exemption certificate is the document proving a customer qualifies. TaxCloud keeps a record of it so you have one source of truth at audit time.
Match the customer identifier. For a certificate to apply to this customer's QuickBooks sales, it must be filed in TaxCloud under the same customer ID the plugin sends. The plugin's Customer Reference setting controls which QuickBooks value that is (ListID, Account Number, or Name) — see Settings reference. Use that same value as the customer identifier when you add the certificate.
To add a certificate, follow Add an exemption certificate in TaxCloud. You'll provide the state it covers, the exemption reason, and the validity dates. TaxCloud records the certificate's information for audit and compliance reporting (it doesn't store the uploaded file itself).
Troubleshooting
Tax still shows after I set the customer to Non.
- Confirm you saved the customer record (Edit Customer → OK).
- The invoice may have been saved before the change — open it and click Save again to recalculate.
- Open the Capture History tab in the plugin's Settings window to see whether the invoice was captured. The debug log (see Troubleshooting) shows whether the exempt flag was sent.
TaxCloud zeroed out tax, but I expected tax in one state. The QuickBooks Non flag is global. Either use a separate customer record for that state, or keep the customer on Tax and manage a per-state certificate exemption in the dashboard.
A customer is only sometimes exempt (e.g. occasional resale). Keep their default Tax Code as Tax and switch to Non only for the exempt transactions — switch back after saving.