Published: November 7, 2023

Does Tennessee’s Non-Profit Exemption Certificate Expire?

Nonprofit exemption certificates in Tennessee

Tennessee’s non-profit Exemption Certificates expire after a certain period. The Tennessee Department of Revenue issued guidelines for non-profits to ensure their exemption certificates are kept up to date. Let’s look further into this.

Guidelines for Tennessee’s Non-Profit Exemption Certificates

What is the Exemption Certificate Process?

In Tennessee, a non-profit entity must apply for and receive a sales and use tax exemption certificate before making tax-exempt purchases. Upon receipt of the certificate, the entity provides it to its distributor or supplier.

The distributor or supplier is responsible for retaining the certificate from the date of receipt as documentation of the tax-exempt purchase. The tax exemption is good for four years from the date of issuance to the non-profit entity. In the fourth year, the Tennessee Department of Revenue will issue a new exemption certificate to the non-profit entity.

Recordkeeping Requirements

The Tennessee Department of Revenue requires recipients to secure the most up-to-date exemption certificates from the non-profit entity. Any exemption certificate with an effective date after the expiration period should be rejected and replaced with a current exemption certificate.

Recently, the Tennessee Department of Revenue completed a review of all registered non-profit entities and issued new exemption certificates with an effective date of July 1, 2023. Still, the previous certificates should be retained on record for audit purposes.

Exemption Certificate Guidelines for Out-Of-State Non-Profits

Tennessee tax law does not require an out-of-state non-profit entity to file for a tax-exempt certificate. Instead, it may present a copy of its 501(c)(3) exemption designation to distributors or suppliers to make tax-exempt purchases.

Given the multitude of considerations for non-profit organizations to stay in compliance with exemption certificates, it’s important to stay abreast of changes in these processes, expiration dates, recordkeeping requirements, and any exclusions that may apply to specific non-profit activities.

To this end, businesses should speak with their advisors or a firm like Clarus Partners, which handles exemption certificate management, for advice on proper exemption certificate management.  For more information, reach out to us at [email protected], or contact us via our contact page.