When you use Avalara for Shopify, tax exemptions are controlled by settings in both Shopify and Avalara. If a customer or company is marked as tax-exempt in Shopify, Avalara will not calculate tax for their orders, even if a valid exemption certificate exists in Avalara's system. This article explains how to configure tax-exempt customers, manage exemption certificates, and troubleshoot calculation issues.
This guide applies to merchants using the Avalara Tax Compliance app in Shopify.
Quick answer
- Individual customer exemptions are set in Shopify Admin > Customers > Edit tax details, where the Don't collect tax setting controls exemption status.
- B2B company exemptions are configured in Shopify Admin > Companies >** Tax settings**, and can apply to entire company profiles or specific regions.
- Exemption certificates are managed separately in Avalara through Exemptions > Customer certificates, and can be linked to Shopify customers using either Shopify-generated or merchant-created Company IDs.
Configure tax-exempt settings for individual customers
To mark an individual customer as tax-exempt in Shopify:
- In Shopify Admin, go to Customers.
- Open the customer record you want to exempt.
- Select Edit tax details.
- Enable the Don't collect tax setting.
- Save the changes.
Once enabled, Avalara will not calculate tax for any orders placed by that customer.
Configure tax-exempt settings for B2B companies
Shopify company profiles allow you to apply tax exemptions to business customers for all orders or specific regions only.
To configure company-level exemptions:
- In Shopify Admin, go to Companies.
- Open the company profile you want to configure.
- Go to Tax settings and review the company tax exemption settings.
- Verify whether exemption rules are enabled.
- Update or remove the exemption settings if you don't want the company to be tax exempt.
- Save the changes.
When a company is configured as tax-exempt, Avalara will not calculate tax for any orders associated with that company profile.
Regional exemptions for customers
Shopify supports regional exemptions, which apply only to specific jurisdictions rather than all orders.
To configure regional exemptions:
- In Shopify Admin, go to Customers.
- Open the affected customer record.
- Select Edit tax details.
- Review the customer tax exemption settings.
- Check whether the Collect tax unless exemption applies setting is enabled.
- Review and update the selected regional exemptions.
- Save the changes.
Manage exemption certificates in Avalara
Exemption certificates are stored in Avalara and linked to customer records through a customer code. For Shopify, this customer code is typically a Company ID.
Access exemption certificate settings in Shopify
You can manage exemption certificates directly from the Shopify admin:
- In Shopify Admin, go to Customers > Company > More details.
- Use the Avalara ECM settings available on the company page.
| Setting | Function |
|---|---|
| Upload certificate | Opens the Avalara portal to Exemptions > Customer certificates, where you can upload an exemption certificate. |
| Request certificate | Sends an email to the company's main contact with a link and secure code to upload a certificate. |
| Refresh icon | Syncs the exemption certificate added in Avalara back to Shopify for viewing and download. |
| Company not synced | Shows the sync status between the customer's company record at Shopify and Avalara ECM. |
Choose between Shopify-generated and merchant-created Company IDs
By default, Shopify generates a numeric Company ID for each company. This ID appears in the URL when you view a company's details page. For example, if the URL is [NEEDS SOURCE], then Shopify syncs 123456789` as the default Company ID in Avalara.
You can replace the default ID with a merchant-created Company ID to keep exemption records consistent with your internal systems.
To configure a merchant-created Company ID:
- From Shopify, go to Customers> Companies.
- Select the company you want to configure.
- Select the 3 dots (Show details) in the customer section, then select Edit company details.
- Enter the Company ID you want to use, then select Save.
- From Avalara Home, go to Integrations.
- Go to the My integrations tab and select Manage settings in the Avalara for Shopify tile.
- Select Show all settings to expand the advanced settings.
- Turn on the Do you sell to other businesses? setting by selecting Yes.
- Select the merchant-created Company ID from the Select the company ID you want to use the list.
- Select Confirm, then select Go to Shopify on the activation popup.
Any exemption certificate uploaded after this change will use the merchant-created Company ID as the customer code in Avalara > Exemptions > Customers. Previously uploaded certificates remain searchable by the Shopify-generated ID.
Troubleshoot customers who are not being charged tax
If tax is not calculating for a specific customer or company, review the tax-exempt settings in Shopify first.
Tax does not calculate for any orders from a specific customer
- In Shopify Admin, go to Customers.
- Open the affected customer record.
- Select Edit tax details.
- Check whether the Don't collect tax setting is enabled.
- Update the setting if the exemption is not intended.
- Save the changes and retest checkout.
Tax does not calculate for B2B company orders
- In Shopify Admin, go to Companies.
- Open the affected company profile.
- Go to Tax settings and review the company tax exemption settings.
- Update or remove the exemption settings if the company should not be tax-exempt.
- Save the changes and retest checkout.
Tax does not calculate for certain regions only
- In Shopify Admin, go to Customers.
- Open the affected customer record.
- Select Edit tax details.
- Verify whether the Collect tax unless exemption applies setting is enabled.
- Review and update the selected regional exemptions.
- Save the changes and retest checkout.
Expert tip: Close the activation popup to continue configuring
When you update advanced settings in Avalara and select Confirm, an Activated popup appears. Close this popup to continue working in the settings page, or select Activate to return to Shopify. This prevents confusion when you need to make multiple configuration changes.
How Galvix can help with exemption certificate management
Requesting, uploading, and linking exemption certificates to the right customer records takes ongoing attention. You need to follow up when certificates expire, verify that each one covers the right jurisdictions, and make sure the customer codes match between your store and your tax system.
Galvix's compliance team handles exemption certificate collection and tracking as part of its managed service. The team requests certificates from exempt buyers, verifies their details, stores them, and follows up before expiration. You stay informed through your dashboard, but you're not manually chasing down paperwork or reconciling customer records.
If managing exemptions is adding hours to your month, see how Galvix works: book a demo
Frequently asked questions
Can I apply different exemption rules to different states for the same customer?
Yes. Use regional exemptions in Shopify to exempt a customer from tax in specific jurisdictions only. The same customer can be charged tax in some states and exempted in others.
What happens to exemption certificates uploaded before I changed to a merchant-created Company ID?
Previously uploaded certificates remain in Avalara and are searchable by the Shopify-generated Company ID. New certificates use the merchant-created Company ID.
How do I verify that a company's exemption certificate is synced between Shopify and Avalara?
Use the Refresh icon in the Avalara ECM settings on the company page in Shopify. The Company not synced status indicator shows whether the sync is complete.
Where do I troubleshoot tax calculation issues that affect all customers, not just exempt ones?
If tax is not calculating for any customer, review your nexus settings and product tax codes in Avalara, and verify that the Avalara Tax Compliance app is active in Shopify.
