How to Apply for a Resale Certificate in Tennessee

If you plan on starting a business in Tennessee where you will sell goods to your customers, you should learn how to apply for a resale certificate in Tennessee. This certificate is a must-have for all businesses that intend to sell products at retail.

What Is a Tennessee Resale Certificate?

A Tennessee resale certificate allows you to purchase your goods without having to pay sales tax on the items. The sales tax will still be collected and paid to the state, but you will not pay it. Instead, the sales tax is paid by your customers when you sell the products.

For example, you sell specialty t-shirts with different images and text. With a resale certificate, you do not pay sales tax to your t-shirt supplier. However, when a customer purchases one or more of your specialty t-shirts, you charge them the sales tax and submit it to the Tennessee Department of Revenue.

A Tennessee resale certificate can also be called a:

Certificate of Resale
Wholesale Permit
Sales Tax Exemption Certificate
Wholesale Certificate

However, you need to avoid getting a resale certificate confused with a seller’s permit or sales tax permit. A seller’s permit or sales tax permit is required for most businesses that sell goods and services. It can also be called a sales tax registration, sales tax number, sales tax ID, or sales tax license.

A Tennessee seller’s permit is required as it allows businesses to conduct business and collect sales tax on taxable goods and services. On the other hand, a Tennessee resale certificate is a separate certificate that allows businesses to purchase goods they intend to resell and not have to pay sales tax.

Who Is Required to Get a Tennessee Resale Certificate?

The state does not mandate businesses have to get a wholesale certificate. However, any business that wishes to avoid paying sales tax on items they intend to sell in Tennessee should consider getting a Tennessee resale certificate.

Do All Sellers Accept Tennessee Resale Certificates?

While most sellers will accept your Tennessee resale certificate, they do not have to accept it. When a supplier does not accept your resale certificate in Tennessee, you will pay the sales tax on the goods you purchase from them.

You will still collect sales taxes from your customers when you resell the items. However, when you file and submit your sales taxes to the Department of Revenue in Tennessee, you can deduct any sales taxes you paid to Tennessee suppliers that did not accept your wholesale certificate.

Are Tennessee Resale Certificates Good in Other States?

Most states will accept Tennessee resale certificates. However, there are ten states that do not accept out-of-state wholesale certificates and waive sales tax on goods purchased for resale. These states include:

California
Florida
Illinois
Alabama
Massachusetts
Washington, D.C.
Louisiana
Washington (State)
Hawaii
Maryland

If you have a supplier in one of these states, you can apply for a wholesale certificate in that state to be exempt from sales taxes. Another option is to attempt to recoup the taxes you paid, but that can be more challenging.

Do Tennessee Resale Certificates Expire?

As long as at least one purchase is made from a supplier every 12 months, your Tennessee resale certificate never expires. However, if you do not meet this minimum requirement, your certificate does expire at the end of the 12-month period. In that case, you would simply reapply for a new wholesale license.

Does Tennessee Accept Out-of-State Resale Certificates?

Tennessee is one of the many states that will usually recognize out-of-state resale certificates. For instance, you find a supplier in Tennessee that sells the products you retail for less than in Georgia, where your business is located. You can present proof of your Georgia resale certificate to the supplier in Tennessee to have Tennessee sales taxes waived.

However, it is entirely up to the supplier whether they will accept an out-of-state resale certificate. If they don’t, you could always apply for a Tennessee resale certificate instead.