TaxByte: Tennessee Announces Repeal of Drop Shipment Exemption Certificate Rule
The Tennessee Department of Revenue has announced that the special collection rules for drop shipments will be eliminated on January 10, 2022 and in-state registration will no longer be required in order to generate a valid resale exemption certificate.
If a Tennessee supplier sells tangible personal property or taxable services to an out-of-state dealer for resale and drop ships the goods to the out-of-state dealer’s Tennessee customer after January 10, 2022, the Tennessee supplier may accept a resale certificate issued by another state or a fully completed Streamlined Sales and Use Tax Exemption Certificate that includes the sales tax ID number issued by the other state to make tax-free drop-shipped sales. An out-of-state dealer (including a marketplace seller) who is not registered for sales tax in any state (e.g., home state does not levy sales tax) may provide a Tennessee supplier with a fully completed Streamlined Sales and Use Tax Exemption Certificate that includes a tax ID number for another tax type (e.g., business tax or excise tax) issued by its home state or its federal identification number (FEIN).
A foreign seller that is not registered in any state in the United States can use a completely completed Streamlined Sales and Use Tax Exemption Certificate and a tax ID number given by its home country to acquire tax-free products from a Tennessee supplier and drop ship them to a Tennessee consumer.
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