In order to allow tax exemptions, you must change the settings for all of your stores individually. To do so, follow these steps:
Go to Locations and select a store
Click on Order Settings and scroll to Required Info
Next to Allow Tax Exemptions, make a selection from the dropdown menu
Click on Update Order Settings
If you select Yes, customers will be able to automatically remove the sales tax when they enter their Tax ID at checkout.
This is what it will look like for customers:
If you select Yes, but require verification, customers will still be able to add their Tax ID but you will have to manually process a partial refund when you receive their tax exemption paperwork.
This is what it will look like for customers:
You will also have to manually process a partial refund for the tax amount on their order.