If you buy products to resell in the state of Tennessee, you can present your Tennessee resale certificate to avoid paying sales tax on that purchase. You should note that the Tennessee Department of Revenue only permits the resale certificates to be used when purchasing merchandise to be resold. items that your business will use directly in your business, or gifts or promotional items.
Here is a brief guide to what you need to know as a seller when using a Tennessee resale certificate or if one of your customers presents you with a Tennessee resale certificate when buying your products.
If you Wish to Use a Tennessee Resale Certificate
You likely received a Tennessee resale certificate when you registered for your Tennessee sales tax permit. If you don’t have this document, you can contact the Tennessee Department of Revenue to request a new copy by calling 615-253-0600 or submitting a request on their website. (Keep in mind that if you have a Tennessee sales tax permit you are required to collect sales tax from your Tennessee buyers.)
You’re allowed to use this certificate to buy items tax free assuming that you’ve filled out the form wholly and correctly and that you genuinely intend to sell, rent, or lease the items you are purchasing tax free. Keep in mind that you can be held legally liable if you buy items tax-free but don’t sell them, so make sure you don’t skip this step! If you find out later that you’re unable to sell the items, you can remit Tennessee use tax on the items at that time to get off the hook.
Keep in mind you are also not allowed to use your resale certificate to buy items like office supplies or client gifts. You can only use your Tennessee resale certificate to buy items you genuinely intend to resale in your business.
Check out the list of Frequently Asked Questions on Tennessee Sales and Use Tax for more info.
If You are Presented with a Tennessee Resale Certificate
As a retailer, you are responsible for a few simple steps when accepting a Tennessee resale certificate from a buyer. Don’t skip this step, because accepting a fraudulent resale certificate – even unknowingly – may result in fines and penalties.
- Make sure the resale certificate is properly completed – Check to ensure the Tennessee resale certificate is signed and includes the buyer’s Tennessee sales tax registration number.
- Verify the certificate with the state – Use this link to verify the validity of a Tennessee resale certificate. You’ll just need to choose the exemption type from the pull-down menu and enter the 9-digit ID number. You can see where to verify retail certificates from every state here.
- Don’t participate in fraud – Of course you already know that this is a good general rule of thumb for all business! But do keep in mind that there are penalties for engaging in collusion with the buyer to make fraudulent sales without charging sales tax.
If you have any questions or comments about Tennessee resale certificates, you should feel free to start the conversation in the comments or in our Sales Tax for eCommerce Sellers Facebook group!