Exemption Certificate Management - Compliance Q&A

Exemption Certificate Management - Compliance Q&A

Sales and use tax compliance can easily drain company resources, particularly when it comes to managing exemption and resale certificates. It can also create confusion and give rise to questions such as the one below, posed by a member of our Community Forum.

What department typically collects exemption certificates on the initial sales transaction?

The questioner explains that exemption certificates are normally collected by their Customer Service or Internal Sales departments. Regrettably, approximately 80% of the certificates received are not valid—often they are incomplete or are simply the wrong form. Another forum member revealed a similar problem.

So what is the best practice?


Many companies create a basic checklist, which can be used to review all incoming certificates to ensure their validity. The exact list would vary by state, but an initial checklist for most states would include the following:

  • Buyer name and address
  • Seller name and address
  • Tax ID number
  • Reason for the exemption
  • Signature and date

Ideally, businesses should tailor guidelines for each state in which they do business, including a list of each state’s acceptable form numbers (often there is more than one). Read more about when you need to collect a sales tax exemption certificate here.


Incoming certificates should be reviewed as they’re collected, which should eliminate the majority of the invalid certificates. A W-9, for example, would not include lines for the reason for the exemption or a seller name, and would therefore not pass the review process.


Alternatively, consider using CertCapture, which pushes the proper forms to customers in the first place.

Have a question of your own? Join our forum, and ask!


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