Yes, Customer Specific Pricing does create additional variants for tax-exempt customers when using the Variant method. It's important to note that if you don’t discount the product the customer will still be exempt from taxes at checkout. The Draft Order method does not involve the use of variants.
However, the combined Customer Specific Pricing and Quantity Breaks app would change the variants as they are viewed as one app instead of two. That's partly why a customization is necessary to use them both together.
By default, the Draft Orders method is supplied on new installs of Customer Specific Pricing, for detailed information on the different methods, visit Discount Methods in Customer Specific Pricing. To switch, visit Switch Discount Methods in Customer Specific Pricing.