A business registered for sales and use tax may use a resale certificate only when purchasing merchandise that will be resold by the business. A business cannot use a resale certificate to purchase merchandise that will be used or consumed in the conduct of the business. Merchandise extracted from inventory for promotional purposes, as gifts, or for personal use must be reported on the sales tax return and tax must be paid to the Department of Revenue.
Reference: Tenn. Comp. R. & Regs. 1320-05-01-.68. Tenn. Code Ann. § 67-6-203.