Effective January 10, 2022, the sales and use tax rule regarding drop shipments is repealed. If a Tennessee supplier sells personal property or taxable services for resale to an out-of-state dealer and drop ships the goods to the out-of-state dealer's Tennessee customer, the 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. Prior to the repeal, the Tennessee supplier had to collect Tennessee sales tax on the sale price of the product sold to the out-of-state dealer, unless the out-of-state dealer provided a Tennessee resale certificate or Streamlined Sales Tax Exemption Certificate with a Tennessee sales tax ID number.
An out-of-state dealer that is not registered for sales tax in any state may provide a Tennessee supplier with a fully completed Streamlined Sales and Use Tax Exemption Certificate including a tax ID number for another tax type 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 may provide a fully completed Streamlined Sales and Use Tax Exemption Certificate with a tax ID number issued by its home country to purchase products for resale without tax that are drop shipped from a Tennessee supplier to a Tennessee customer.