SUT-35 - Sale for Resale - Drop Shipments to Tennessee Customers

If a Tennessee supplier sells goods to an out-of-state dealer and drop ships the goods to the out-of-state dealer's Tennessee customer, 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 either of the below apply:

  • 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.

To learn more information about drop shipments, please read these publications on our website:

Important Notice dated December 1998, Letter Ruling #00-45, and Letter Ruling #96-37.

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