Customer sets a tax exemption number and removes sales tax calculation from the total.
One the One Page Checkout, customer can set a tax exemption number and select a state in the Payment Information tab. This will cause the tax calculation to be bypassed. Note, you are responsible for collecting all taxes as set by law.
Upload files to root of your Magento install. Configure the extension in the admin in System -> Configuration -> Sales -> Tax -> Tax Exempt. Enable the extension and set optional configuration.

