Thank you for the response abolabo but we are looking for how to do this for only particular customers regardless of location.

Thank you llegrand also.  We have groups set up already.  I just don't know how to designate a certain group to be tax exempt.  I couldn't find a flag that would do it or a place where I could add something special for that group to say that it should be exempt from taxes.

I thought of the second store solution but I'm thinking something like this should not have to be that complicated.  All kinds of entities are tax exempt - schools, non-profits, etc - I'm surprised there isn't a flag that I can set somewhere for a customer to say they are exempt.