Issue: Tax-exempt products on the store are still being marked for tax calculation on TaxCloud
Cause: TaxCloud does not use Shift4Shop's Tax Exempt setting. It uses its own Tax Information Codes (TICs) for this.
The Tax Exempt setting in your Shift4Shop store's product configuration page is mainly used when Tax Calculation is being performed by the Shift4Shop store itself. In other words, if you are using the default Zip Code based tax calculation that your store is preset with, you can mark individual items as tax-exempt as needed.
When you are using TaxCloud for your store's Tax Calculation, however, and you need to have some items marked as "Tax Exempt," then the exemptions will need to be set up on the TaxCloud side of things.
This is done on the TaxCloud service within their Taxability Codes area, where you will set up Taxability Information Codes (TICs) for your products.
Please refer to TaxCloud's documentation and support channels for more information.