Tennessee Repeals Drop Shipment Rule

January 7, 2022

Tennessee Repeals Drop Shipment Rule

The Tennessee Department of Revenue has repealed its drop shipment rule, Rule 96, effective Jan. 10. This update resulted from changes ushered in by the Wayfair decision subjecting out-of-state sellers to tax more directly. The department said: “If a Tennessee supplier sells to an out-of-state dealer personal property or taxable services for resale and drop ships the goods to the out-of-state dealer’s Tennessee customer, the Tennessee 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 to make drop-shipped sales for resale without tax. Prior to the repeal of Rule 96, the Tennessee supplier had to collect Tennessee sales tax on the sales 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.” Read the full bulletin here for more information.

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State:

Tennessee

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