Create the Exempt Sales Tax Jurisdiction

1. AR, Utilities, Sales Tax, Maintain.
2. Create a new sales tax with ID as EXMT.
3. Enter the rate as 0.00 and SAVE.

Add the sales tax jurisdiction to your customers

1. AR, Customers, Maintain Customers.
2. Select the sales tax exempt customer. 
3. Click the Inv/Stmt... button.
4. Choose the EXMT sales tax in the 1st Sales Tax field.

Sales Tax Reporting

1. AR, Reports, Sales Tax Report.
2. Select the reporting period.
3. Sales for will appear in your EXMT jurisdiction in the Non-Taxable column.