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Department of Revenue warns: don't use resale certificates for items used in your business
Summary
Tennessee revenue auditors told operators that resale certificates are for goods intended for resale (including disposable containers that accompany sales); items used by the business (cleaning supplies, foil, equipment) generally trigger use tax or must be reported on returns.
Kimberly Collins, a tax auditor with the Tennessee Department of Revenue, said resale certificates should be used only for purchases intended for resale and that auditors frequently see mixed transactions from wholesale clubs that include taxable use items: “As an auditor, I say, include everything and then exempt what needs to be exempted.”
The presenters advised restaurants and lodging businesses to separate resale purchases from items used in the conduct of business and to report withdrawals online when merchandise meant for resale is subsequently consumed or gifted. The webinar recommended keeping resale certificates on file, maintaining subcategories in POS systems and retaining records for three years plus the current year to support audits.
