Tax exemption allows certain customers—such as nonprofit organizations, government entities, or resellers—to make purchases without paying sales tax. This exemption is granted when the buyer provides valid documentation, like a tax exemption certificate or resale license, proving their eligibility. Retailers are responsible for verifying and retaining this documentation to comply with tax laws. The exemption typically applies only to purchases directly related to the buyer’s tax-exempt purpose—for instance, office supplies for a nonprofit’s operations or inventory for resale by a business.