67-6-409 - Procedures for claiming exemption Liability. - Tennessee Statutes

67-6-409. Procedures for claiming exemption Liability.

(a)  When a purchaser claims an exemption:

     (1)  The seller or certified service provider shall obtain identifying information of the purchaser and the reason for claiming a tax exemption at the time of the purchase in accordance with the rules and regulations promulgated by the commissioner. The identifying information shall include: name, address, type of business, reason for exemption and a tax identification number issued by this state or other governmental authority as required by the commissioner;

     (2)  The seller or certified service provider shall obtain either a copy of the purchaser's authorization for exemption issued by the commissioner or obtain, either in paper or electronic medium, a fully completed Streamlined Sales Tax certificate of exemption as approved by the governing board of the Streamlined Sales and Use Tax Agreement. The seller or certified service provider is not required to obtain a purchaser's signature for an electronic form of a certificate of exemption; however, the seller or certified service provider shall obtain from the purchaser all other information for proof of a claimed exemption regardless of the medium in which the transaction occurred;

     (3)  The commissioner may utilize a system in which purchasers qualifying to make tax exempt purchases are issued an identification number that must be presented to the seller at the time of the sale; and

     (4)  The seller and certified service provider shall maintain proper records of exempt transactions and provide them to the commissioner when requested.

(b)  (1)  Sellers and certified service providers that follow the requirements of this section are not liable for the tax imposed by this chapter otherwise applicable, if it is determined that the purchaser improperly claimed an exemption, in which case the purchaser shall be liable for the tax. In the event a seller has a recurring business relationship with a purchaser, the seller and certified service provider are relieved from the tax imposed by this chapter, if the seller has obtained a blanket exemption certificate from the purchaser. A seller and a certified service provider shall not be required to update or renew blanket exemption certificates when there is a recurring business relationship.

     (2)  The seller or certified service provider shall remain liable for the tax if the purchaser claims an entity-based exemption and the subject of the transaction sought to be covered by the exemption certificate is actually received by the purchaser at a location operated by the seller in this state, and the standard exemption certificate clearly and affirmatively indicates the claimed exemption is not available in this state.

     (3)  For purposes of this subdivision (b)(1), a “recurring business relationship” means at least one (1) sale transaction within a period of twelve (12) consecutive months.

(c)  Sellers or certified service providers that do not follow the requirements of this section shall be liable for the tax.

(d)  Sellers that fraudulently fail to collect tax or that solicit a purchaser to participate in the unlawful claim of an exemption shall be liable for the tax.

[Acts 2003, ch. 357, § 57; 2004, ch. 959, § 68; 2005, ch. 311, § 1; 2005, ch. 499, § 72; 2007, ch. 602, §§ 51, 103.]