With this option1) selected in the DynamicZip Setup window DynamicZip will see any customer who has an Exempt Tax Schedule as exempt. If the customer has an Exempt Tax Schedule then DynamicZip will only assign them exempt schedules when the Tax Schedule Selection process runs.
This option was added with Build 72 to preserve backward compatibility. The recommended method to set and preserve customers' exempt (and/or taxable) status is via the DZ Customer Supplement window Knowing that some of our users have been relying on the Preserve Exempt feature (which was automatic and always on prior to build 72) we created this setup option to ease the transition to build 72.
NOTE: A Taxable Status setting of Taxable or Exempt in the DZ Customer Supplement window overrides this setup option. For this setup option to work, you must select a Taxable Status of Default or Ask in the DZ Customer Supplement window.