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Leslie Bonacum

New CCH White Paper Examines Sales Tax Exemption Management

(RIVERWOODS, ILL., May 25, 2010) – Taxable or exempt? As a general rule, customers have the obligation to demonstrate to a licensed seller that they should not be charged sales tax (or seller’s use) on their purchases. Even though in most cases the customer maintains the ultimate liability for the tax, the licensed seller has the obligation to remit the tax (whether collected from the customer or not) to the applicable taxing authority otherwise they inherit the associated tax exposure for failing to remit the tax on a taxable transaction. This and other important customer exemption management issues are discussed in a new white paper, Customer Exemption Management, from CCH, a Wolters Kluwer business and a leading provider of tax, accounting and audit information, software and services ( To access the white paper, click here.

In the white paper, CCH Sales and Use Tax Analyst Phil Schlesinger notes that managing customer exemptions is one of the most important but often challenging tasks for many companies doing business in taxable states.

“At the end of day, successful customer exemption management is critical to a business that has exempt customers, or customers who can be treated as exempt under certain situations, in order to minimize tax exposure and future audit assessments,” Schlesinger says.

In the white paper, Schlesinger points out a number of complications that may arise in managing exemptions. For example:

  • Although most exemptions are “blankets” covering all items purchased at any time, businesses must also be able to process single-use exemptions, applicable to a single transaction; 
  • Customers sometimes provide exemption certificates to their suppliers with specific instructions not to exempt certain items associated with the transaction;
  • While exemptions often run for a limited period of time before requiring renewal, the length of the exemption may not appear on the exemption certificate, but must be researched;
  • Many states treat drop-shipment transactions as resale transactions, and they will accept an exemption certificate from the customer’s home state, but some states will not; and
  • While most separately administered home-rule localities accept a state exemption certificate, some will not and will require their own certificate to be obtained to support the exemption.

The white paper concludes with several best practices guidelines for managing customer exemptions, which Schlesinger considers one of the most important but often challenging tasks for many companies doing business in taxable states.

About the Author

Phil Schlesinger has been in the sales and use tax field for 22 years and has extensive knowledge and experience in sales and use tax compliance, audit, tax research and automation, both in a corporate environment and in a consulting role. While in consulting, he prepared taxability matrixes for dozens of companies representing numerous types of industries such as software, manufacturing, services, food, medical, advertising and construction. Over his career, Schlesinger has also been heavily involved in the design, testing and operation of several sales and use tax software tax calculation engines and tax return processing systems.

For More Information

Members of the press interested in speaking with CCH’s Phil Schlesinger should contact: Leslie Bonacum at 847-267-7153, For information on CCH CorpSystem® sales and use tax solutions, call 1-866-513-2677 or visit

About CCH, a Wolters Kluwer business

CCH, a Wolters Kluwer business ( is the leading global provider of tax, accounting and audit information, software and services. It has served tax, accounting and business professionals since 1913. Among its market-leading solutions are The ProSystem fx® Suite, CorpSystem®, CCH® IntelliConnect™, Accounting Research Manager® and the U.S. Master Tax Guide®. CCH is based in Riverwoods, Ill. Wolters Kluwer is a market-leading global information services company.

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