Sales and Use Tax Notice - Notice #22-01 - January 2022 - Drop Shipment Rule Repealed

Sep 19, 2026

This notice explains changes to Tennessee sales and use tax rules for drop shipments effective January 10, 2022. It states that Sales and Use Tax Rule 96 regarding drop shipments is repealed and describes how Tennessee suppliers may handle resale transactions when goods are shipped from Tennessee to an out-of-state dealer’s Tennessee customer. It summarizes conditions for accepting resale certificates and Streamlined Sales and Use Tax Exemption Certificates from other states or for dealers not registered in any state, including treatment for foreign sellers not registered in the United States.

LanguageEnglish

CategoryLetters

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Pages2

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Sales and Use Tax Notice

Notice identification

Drop Shipment Rule change effective January 10, 2022

Acceptance of resale certificates and streamlined exemption certificates

Dealer registration scenarios and foreign sellers

For more information

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Elizabeth | Jerbi | dŝƚůĞ Indirect | Tax Manager | | 􀀘ĂƚĞ 1/1/2026 | | --- | --- | --- | --- | --- | --- | --- | ZĞǀ͘ ϳͬϭϵ Sales and Use Tax Notice Notice \#22-01 January 2022 Drop Shipment Rule Repealed Sales and Use Tax Rule 96 Regarding Drop Shipments is Repealed, Effective January 10, 2022 If a Tennessee supplier sells to an out-of-state dealer personal property or taxable services for resale and drop ships the goods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 ora 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 Te

FAQs

What rule change is covered by this notice?

The notice states that Sales and Use Tax Rule 96 regarding drop shipments is repealed, effective January 10, 2022.

Under the notice, when can a Tennessee supplier make drop shipped sales for resale without tax?

When the transaction is for resale and the supplier accepts either a resale certificate issued by another state or a fully completed Streamlined Sales and Use Tax Exemption Certificate that includes the other state’s sales tax ID number.

What documentation may an out-of-state dealer provide if it is not registered for sales tax in any state?

The dealer may provide a fully completed Streamlined Sales and Use Tax Exemption Certificate including a tax ID number for another tax type issued by its home state, or its federal identification number (FEIN).

Sep 19, 2026

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