Exemptions Behavior

There are many sales for which you shouldn’t charge any sales tax. In any calculation Numeral will return the appropriate amount - even if it’s zero. You won’t have to build a different handler for exempt sales, but we do include information in the calculation responses to clarify why we refrain from collecting tax on some orders. Let’s look at some examples of these messages and tax-exempt situations.

Product exemption

If your product is exempt in a certain state or jurisdiction, we’ll return the accurate sales tax rate of 0%

Food sales are exempt in Michigan. A calculation with the following line items in Michigan will get the following response.

Example line items

    "line_items": [
      {
        "product_category": "GENERAL_MERCHANDISE",
        "amount": 1000,
        "quantity": 1
      },
      {
        "product_category": "FOOD_GENERAL",
        "amount": 1000,
        "quantity": 1
      }
    ]

Sample response

{
  "customer_currency_code": "USD",
  "expires_at": 1737613667,
  "id": "calc_173752726701471b4bfed-454c-4454-8b55-84bcb6d56eb8",
  "line_items": [
    //This first line item is the taxable general merchandise
    {
      "amount_excluding_tax": 1000,
      "amount_including_tax": 1060,
      "product": {
        "product_tax_code": "GENERAL_MERCHANDISE",
        "reference_line_item_id": "",
        "reference_product_id": "",
        "reference_product_name": ""
      },
      "quantity": 1,
      "tax_amount": 60,
      "tax_jurisdictions": [
        {
          "fee_amount": 0,
          "jurisdiction_name": "MICHIGAN",
          "note": "",
          "rate_type": "STATE SALES TAX",
          "tax_rate": 0.06 //Taxable sale has a standard rate
        }
      ]
    },
    //This line item is for the exempt food sale
    {
      "amount_excluding_tax": 1000,
      "amount_including_tax": 1000,
      "product": {
        "product_tax_code": "FOOD_GENERAL",
        "reference_line_item_id": "",
        "reference_product_id": "",
        "reference_product_name": ""
      },
      "quantity": 1,
      "tax_amount": 0,
      "tax_jurisdictions": [
        {
          "fee_amount": 0,
          "jurisdiction_name": "MICHIGAN",
          "note": "",
          "rate_type": "STATE SALES TAX",
          "tax_rate": 0 //Exempt sale means 0% rate
        }
      ]
    }
  ],
  "metadata": {
    "example_key": "example_value"
  },
  "object": "tax.calculation",
  "tax_included_in_amount": false,
  "testmode": true,
  "total_amount_excluding_tax": 2000,
  "total_amount_including_tax": 2060,
  //total_tax_amount will always display how much tax to charge
  "total_tax_amount": 60
}

No nexus

When you send a calculation in a jurisdiction in which you don’t have nexus, Numeral’s response will indicates not to collect any tax. We’ll include a note in the tax jurisdiction information indicating you don’t have nexus.

No nexus response example

{
  "customer_currency_code": "USD",
  "expires_at": 1737614217,
  "id": "calc_173752781756346aad91d-c61d-4ee2-a0af-53945dc7abdb",
  "line_items": [
    {
      "amount_excluding_tax": 1000,
      "amount_including_tax": 1000,
      "product": {
        "product_tax_code": "GENERAL_MERCHANDISE",
        "reference_line_item_id": "",
        "reference_product_id": "",
        "reference_product_name": ""
      },
      "quantity": 1,
      "tax_amount": 0,
      "tax_jurisdictions": [
        {
          "fee_amount": 0,
          "jurisdiction_name": "State Tax",
          "note": "no_collection_no_state_nexus",
          "rate_type": "Sales Tax",
          "tax_rate": 0
        }
      ]
    }
  ],
  "object": "tax.calculation",
  "tax_included_in_amount": false,
  "testmode": false,
  "total_amount_excluding_tax": 1000,
  "total_amount_including_tax": 1000,
  "total_tax_amount": 0
}

Exempt customer

When you create a customer and pass the customer.id into a calculation, Numeral will check to see if that customer has been designated as exempt. If they have, we’ll include that information in the tax jurisdiction’s note.

Exempt customer response example

{
  "customer_currency_code": "USD",
  "expires_at": 1737614833,
  "id": "calc_173752843360152feec1a-e703-476e-a592-ca03e7078b50",
  "line_items": [
    {
      "amount_excluding_tax": 1000,
      "amount_including_tax": 1000,
      "product": {
        "product_tax_code": "GENERAL_MERCHANDISE",
        "reference_line_item_id": "",
        "reference_product_id": "",
        "reference_product_name": ""
      },
      "quantity": 1,
      "tax_amount": 0,
      "tax_jurisdictions": [
        {
          "fee_amount": 0,
          "jurisdiction_name": "State Tax",
          "note": "no_collection_exempt_customer",
          "rate_type": "Sales Tax",
          "tax_rate": 0
        }
      ]
    }
  ],
  "object": "tax.calculation",
  "tax_included_in_amount": false,
  "testmode": false,
  "total_amount_excluding_tax": 1000,
  "total_amount_including_tax": 1000,
  "total_tax_amount": 0
}