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Last Updated: 3/22/2017

Record-keeping

When sellers make a tax-exempt sale, they must keep records that prove the sale is not taxable. This “proof of exemption” may vary depending on the purchaser, what they bought, and how they paid.

Sales to the federal government

If you do not charge tax on a sale to the federal government, you must keep proof the purchase is not taxable. Examples include:

  • A completed purchase order, or similar document, that clearly identifies the purchaser.
  • Proof of direct payment by the federal government such as a check or credit card number. Keep a copy of the sales invoice, receipt, or online transaction log that includes payment information.

Sales to foreign diplomats or missions

If you do not charge sales tax on a sale to a foreign diplomat or mission, review the exemption card being used to make sure the sale qualifies. You must keep proof the purchase is not taxable. Examples include:

If the card is expired, the sale is taxable. You may verify the card on the U.S. State Department website or by calling the number on the back of the tax exemption card.

Note: Pay close attention to any restrictions listed on the card. For example, some cards require sales tax on prepared food, hotel rooms, or on purchases under a certain dollar amount. 

Exemption questions

If you have questions about the exemption card or what is covered, call the U.S. State Department at the number on the back of the card.

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