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Understanding Exemptions

Many transactions may be partially or entirely exempt from sales tax. These exemptions can depend on factors such as the type of customer, product, or the intended purpose of the purchase.

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Product-Type Exemptions

Certain products, like food and clothing, may be exempt from sales tax or subject to reduced rates in specific jurisdictions. The rules governing these exemptions are often complex. For instance, in Philadelphia, sweetened iced coffee is taxed unless more than 50% of its volume is milk. To manage these complexities, Commenda applies a conservative approach to sales tax calculations. When insufficient details are available to make a precise determination, Commenda defaults to the tax treatment with the higher rate to reduce audit risk.

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Purpose Exemptions

Some buyers, such as wholesalers, may qualify for exemptions when purchasing goods for resale or specific purposes.

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Customer-Type Exemptions

Certain customers, like government agencies or nonprofits, are typically exempt from sales tax in most situations.

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Exemption Certificates

For both purpose and customer-type exemptions, sellers must collect exemption certificates from buyers. In the event of an audit, these certificates prove the seller was not required to collect sales tax on the transaction. You can manage exemption certificates at the customer level by calling our /customers collection of endpoints.