In order to make a customer and items tax exempt in Heartland Retail, you'll need to create a custom field on the customer or item group called "Tax Exempt?". We recommend that you make this field a "Pick from a list" value, as shown here:

Once you have created your custom field, navigate to the customer or item record you wish to make tax exempt and update their "Tax Exempt?" field to mark them as tax exempt, as shown here for customers:

Or here for items:

The last step is to update your applicable tax rules to add a filter so that your tax exempt customers and items are excluded from the tax calculation. If you have multiple tax rules, you need to set this filter on each of your tax rules, as shown here for customers:

Or like this for items:

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