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Conducting nontaxable sales

SOLVEDby QuickBooksQuickBooks Online1320Updated September 20, 2021

Learn how to determine if your sale is exempt from tax in QuickBooks Online.

While most items and transactions are taxed, some aren't. Generally, you're not required to collect sales tax for the following items.

Note: Always check with your individual state tax authority as to which goods and services are subject to sales tax.

Resold items

Retailers don't typically have to pay sales tax on wholesale purchases. It's assumed that the end consumer will pay sales tax on these items at the point of purchase.

Raw materials

If you produce and sell goods that will be used as raw material for other goods, these items are typically considered sales tax exempt.

Transactions with nonprofit organizations

Sales made to nonprofit organizations are normally exempt from sales tax If you're involved in these types of transactions, you'll need to get a copy of the buyer's tax-exempt certificate or number (issued by the state/province they're in).

Identify taxable and nontaxable customers

You can run a customer list report to identify taxable and nontaxable customers.

  1. Select Reports.
  2. In the Sales and customers ▼ dropdown, select Customer Contact List.
  3. Select Customize.
  4. Select Change columns, then select the Taxable checkbox.
  5. Select Run report to show taxable and nontaxable customers.

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