Can a Tennessee supplier sell goods to an out-of-state dealer as an exempt sale for resale when it also drop ships the goods to the out-of-state dealer’s Tennessee customer?

No. Generally, under these circumstances, the Tennessee supplier must collect and remit Tennessee sales tax on the price of the goods sold to the out-of-state dealer.  However, the sale would be considered an exempt sale for resale if:

• The out-of-state dealer registers for Tennessee sales tax purposes and provides the Tennessee supplier with a Tennessee resale certificate or Streamlined Sales and Use Tax Certificate of Exemption that includes the out-of-state dealer’s Tennessee sales tax account number; or
• The Tennessee customer is also reselling the goods, and the Tennessee supplier obtains the Tennessee customer’s Tennessee resale certificate and the out-of-state dealer’s home state resale certificate.