Who collects Tennessee sales tax on dropshipped orders?

You do, as the retailer. Your dropshipper invoices you at wholesale; you invoice the customer at retail. Collection duty follows the retail transaction — that's you.

Will my dropshipper charge me Tennessee sales tax on the wholesale?

Only if your dropshipper has Tennessee nexus AND you can't provide a valid TN resale certificate. Obtain resale certificates for every state where your dropshipper operates.

Does dropshipping trigger economic nexus in Tennessee?

Yes, your retail revenue into Tennessee still counts toward the $100,000 threshold, independent of how fulfillment happens.

Can I use an out-of-state resale certificate for a dropshipper in Tennessee?

Usually yes — most states accept the Streamlined (SST form F0003) or MTC multijurisdiction resale certificate, so your TN dropshipper can take it instead of charging you tax on the wholesale invoice. But California, Florida, Hawaii, Illinois, Maryland, and Massachusetts reject an out-of-state certificate from the true retailer in a drop shipment and effectively require in-state registration (Florida also wants a transaction authorization number). Confirm Tennessee's current rule with its Department of Revenue. Verified 2026-06-27.

Tennessee Dropshipping Sales Tax Guide — 2026

Updated 2026-07-20

Reviewed by Nexus by State research team using official state tax sources. Last reviewed 2026-07-20.

Guide content last reviewed: 2026-07-20

If your Dropshipping business sells $100,000 into Tennessee in a calendar year, you have economic nexus and must register, collect, and remit Tennessee sales tax.

Dropshipping sales tax in Tennessee

As of June 2026, a Tennessee drop shipment is a three-party sale: you collect Tennessee sales tax from your customer on the retail price once your sales into the state pass $100,000, while your supplier charges you tax on the wholesale invoice only when it has Tennessee nexus and you can’t give it a valid resale certificate.

Dropshipping into Tennessee raises three distinct tax questions. First, you (the retailer) have to collect and remit Tennessee sales tax on your retail sales if you exceed $100,000. Second, your dropship supplier may charge YOU sales tax on the wholesale invoice if they have Tennessee nexus and you can't present a valid resale certificate. Third, the marketplace (if any) handles its own tax on facilitated transactions.

Tennessee applies 7.00% as the base state rate; local add-ons average 2.61%.

Resale certificates: which document each state accepts

If you hold a Tennessee sales tax permit, you can usually issue your dropshipper a TN resale certificate so it does not charge you sales tax on the wholesale invoice.
No Tennessee permit yet? Two multistate forms cover most states: the Streamlined Sales Tax Certificate of Exemption (SST form F0003), honored by all 24 SST member states, and the MTC Uniform Sales & Use Tax Resale Certificate, accepted by roughly 36 states.
A handful of states reject an out-of-state resale certificate from the true retailer in a drop shipment and effectively require in-state registration or extra paperwork — notably California, Florida, Hawaii, Illinois, Maryland, and Massachusetts. Florida also requires the supplier to obtain a transaction authorization number before honoring an MTC certificate. In those states a home-state certificate alone may not protect your supplier, so confirm the rule with that state’s Department of Revenue.

Sources: MTC Uniform Sales & Use Tax Resale Certificate (multijurisdiction) and the Streamlined Sales Tax Governing Board. date_retrieved: 2026-06-27. State acceptance changes — verify with the relevant state DOR before relying on a multistate certificate.

Common dropshipping mistakes in Tennessee

Treating your dropshipper's nexus as if it obligates them to collect from the end customer — no, they invoice you at wholesale; you invoice the customer at retail. Only the retail transaction is subject to collection duty.
Forgetting that your retail revenue into Tennessee still counts toward the economic nexus threshold, independent of the dropshipping arrangement.
Not keeping resale certificates on file — your supplier will charge you tax (and you'll have already collected from the customer), eroding margin.

Tennessee nexus note

Economic nexus in Tennessee triggers at $100,000 in gross sales delivered into Tennessee in the current or prior calendar year. No transaction count threshold.

What to do next

Read the full Tennessee overview for thresholds, filing frequency, marketplace facilitator rules, and registration links. Use the nexus calculator to check whether you have crossed the threshold. For background on the post-Wayfair economic nexus framework, see the pillar guide.

Dropshipping sales tax in other states

Compare Tennessee's dropshipping rules with nearby and similar states' dropshipping sales tax guides:

Frequently asked questions

Who collects Tennessee sales tax on dropshipped orders?: You do, as the retailer. Your dropshipper invoices you at wholesale; you invoice the customer at retail. Collection duty follows the retail transaction — that's you.
Will my dropshipper charge me Tennessee sales tax on the wholesale?: Only if your dropshipper has Tennessee nexus AND you can't provide a valid TN resale certificate. Obtain resale certificates for every state where your dropshipper operates.
Does dropshipping trigger economic nexus in Tennessee?: Yes, your retail revenue into Tennessee still counts toward the $100,000 threshold, independent of how fulfillment happens.
Can I use an out-of-state resale certificate for a dropshipper in Tennessee?: Usually yes — most states accept the Streamlined (SST form F0003) or MTC multijurisdiction resale certificate, so your TN dropshipper can take it instead of charging you tax on the wholesale invoice. But California, Florida, Hawaii, Illinois, Maryland, and Massachusetts reject an out-of-state certificate from the true retailer in a drop shipment and effectively require in-state registration (Florida also wants a transaction authorization number). Confirm Tennessee's current rule with its Department of Revenue. Verified 2026-06-27.

Sources

date_retrieved: 2026-05-27