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X12 transaction guide · Government and regulatory

EDI 283 Tax or Fee Exemption Certification

The X12 document buyers use to certify the tax-exempt status of transactions to sellers, and sellers use to verify exemptions with tax authorities.

Sent by
Buyer, or seller
Received by
Seller, or taxing authority
Standard
ANSI ASC X12

What is an EDI 283?

The EDI 283 Tax or Fee Exemption Certification is the ANSI X12 transaction set a buyer can send to a seller to certify the tax-exempt status of one or more business transactions, and a seller can send to a taxing authority to verify that the exemption is valid.

Purchases for resale, by exempt organizations or for certain uses are often exempt from sales tax, but the seller must hold a valid certificate to justify not charging tax. Exchanging certificates electronically keeps them complete and current, which protects sellers in audits.

How the EDI 283 worksDiagram of the EDI 283 Tax or Fee Exemption Certification. Buyer, or seller sends it to seller, or taxing authority. It usually starts the exchange. It is usually followed by 997. Inside the ISA, GS and ST envelopes, X12 release 008010 requires, in the heading: BGN (Beginning Segment) and the required NM1 loop with NM1 (Individual or Organizational Name) and detail: the required TXI loop with TXI (Tax Information) and LQ (Industry Code Identification). 1 optional loops are listed by their first segment.How the EDI 283 worksTax or Fee Exemption Certification: who sends it, where it fits and what the standard marks required1 WHERE IT FITSUSUALLY FOLLOWSStarts the exchangeEDI 283SENDERBuyer, or sellerRECEIVERSeller, or taxingauthority997 or 999 acknowledgment back, if the partners agreeUSUALLY FOLLOWED BY997FunctionalAcknowledgment2 WHAT X12 RELEASE 008010 REQUIRESInterchange: sender and receiver IDsISA … IEAFunctional group, ID code TEGS … GETransaction set 283ST … SEHEADINGBGNBeginning SegmentRequired loop NM1 · repeats up to 2NM1Individual or Organizational NameDETAILRequired loop TXI · repeats many timesTXITax InformationLQIndustry Code Identification+ 1 optional loop, starting with:LXBlue box: required loop. Optional loops are listed by the segment that starts them; when a loop is used, that first segment is required. Optional segmentsoutside loops are not drawn.Structure: required segments and loops in the X12 008010 listing for the 283. Your trading partner's implementation guide adds its own requirements.
How the EDI 283 worksDiagram of the EDI 283 Tax or Fee Exemption Certification. Buyer, or seller sends it to seller, or taxing authority. It usually starts the exchange. It is usually followed by 997. Inside the ISA, GS and ST envelopes, X12 release 008010 requires, in the heading: BGN (Beginning Segment) and the required NM1 loop with NM1 (Individual or Organizational Name) and detail: the required TXI loop with TXI (Tax Information) and LQ (Industry Code Identification). 1 optional loops are listed by their first segment.How the EDI 283 worksTax or Fee Exemption Certification: who sendsit, where it fits and what the standard marksrequired1 WHERE IT FITSUSUALLY FOLLOWSStarts the exchangeEDI 283SENDERBuyer, or sellerRECEIVERSeller, or taxingauthority997 or 999 acknowledgment back, if the partnersagreeUSUALLY FOLLOWED BY997Functional Acknowledgment2 WHAT X12 RELEASE 008010 REQUIRESInterchange: sender and receiver IDs (ISA… IEA)Functional group, ID code TE (GS … GE)Transaction set 283 (ST … SE)HEADINGBGNBeginning SegmentRequired loop NM1 · repeats up to2NM1Individual orOrganizational NameDETAILRequired loop TXI · repeatsmany timesTXITax InformationLQIndustry CodeIdentification+ 1 optional loop, starting with:LXBlue box: required loop. Optional loops are listedby the segment that starts them; when a loop isused, that first segment is required. Optionalsegments outside loops are not drawn.Structure: required segments and loops in the X12008010 listing for the 283. Your trading partner'simplementation guide adds its own requirements.

How to read this diagram: the top row shows who sends the 283, to whom, and which documents usually come before and after it. The lower part shows what X12 release 008010 itself requires: the envelopes around the 283 and the segments and loops the standard marks as required, area by area. Optional loops are listed by the segment that starts them rather than drawn in full. This is the standard's minimum, not a trading partner's requirement: each partner's implementation guide usually makes some optional loops mandatory, restricts the codes and may use a different release.

Expand diagram Download SVG

When it is used

  • Providing exemption certificates to suppliers
  • Updating expired or changed certificates
  • Verifying exemptions with tax authorities

Where it fits in the document flow

This document 283 Tax or Fee Exemption Certification
Usually followed by 997 Functional Acknowledgment

Structure

Mandatory segments in the 283 (X12 release 008010)

The segments X12 release 008010 marks as mandatory at their level, in order. Segments inside optional loops are needed only when the loop is used. This is the standard's requirement, not your trading partner's: each partner's implementation guide names the release it uses, adds the optional segments it requires and restricts the values. The requirement status comes from one published X12 reference listing and has not been checked against a second source.

  • ST
  • BGN
  • NM1
  • TXI
  • LQ
  • LX
  • N1
  • PID
  • SE

Practical example

The 283 in practice

A hospital buys medical supplies tax-exempt as a nonprofit. It sends each supplier a 283 with its exemption number, the reason for exemption and the states covered. The suppliers record the certificate and stop charging sales tax on the hospital's orders.

Implementation

Implementation considerations for the 283

  • Keep certificates current and track expiry dates.
  • Verify exemption numbers where authorities allow.
  • Link certificates to customer accounts and states.
  • Retain exemption certificates for tax audits.

How ECOM helps

Automate the 283 with ECOM

Solution

Financial Document Automation

Automate invoices, remittances, payment files and bank statements from capture to posting.

Industry

Healthcare

Secure B2B integration and file transfer for providers, suppliers, distributors and healthcare partners.

Solution

Order-to-Cash Automation

Automate the flow from purchase order to payment across every customer channel.

More general questions about EDI are answered in the EDI FAQ.

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Related government and regulatory documents

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