Tennessee Taxing Information
Unpaid tax liabilities will cycle through the collections department and will continue to accrue penalties and interest throughout the process until resolved or paid in full.
If you fail to file your taxes or make payments on time, the Department of Revenue will begin the collection process. A bill will be sent to you and your case will be directed to the Call Center who will try to contact you to resolve the liability. If the liability is not paid or resolved, your case will continue on to the Revenue Tax Enforcement Division. During this time your liability will continue to accrue penalties and interest.
The Revenue Tax Enforcement Division will send you a final demand for payment, which gives you 10 days to pay the liability. A lien may also be filed at this time to protect the state's interest. If you fail to pay the liability or make payment arrangements, levy actions will begin.
The interest rate on all taxes collected or administered by the Department of Revenue will be 7.25%, effective July 1, 2011 through June 30, 2012. The interest rate for installment payments will be 10.25%, effective July 1, 2011 through June 30, 2012.
Rates prior to July 1, 2009 are 9% on taxes collected and 12% on installment payments.
Hearings & Disputes
If you do not agree with a Notice of Assessment, you may request an informal conference to discuss the assessment. You must request the conference in writing within 30 days of the date of the Notice of Assessment.
You also have a 90-day period to contest the assessment by filing suit in chancery court. If you have requested an informal hearing, the 90-day period will resume running after a decision regarding any adjustments has been made. You are not required to request an informal conference before contesting the assessment in court.
A levy is when the state will seize your assets such as bank accounts, real estate, personal property and rights to property, and then sell them to satisfy your outstanding tax liability. You will receive a 10-day notice before a levy on your assets is enforced and a 30-day notice before seized assets are liquidated. Expenses related to the levy and sale will be added to your tax bill and paid from the money made from the sale first, with any remaining amount being applied to the tax liability.
If you have a tax liability that has not been paid, the state may file a tax lien against you with the secretary of state or county recorders office. A lien is a public notice that can affect your credit score along with your ability to obtain a loan or sell and purchase real estate. A lien secures the state's interest and gives the state the power to seize and sell your property to satisfy your tax liability.
Delinquent taxes are subject to a minimum penalty of $15.00 or an accrued penalty of 5% for each 30 days or fraction of 30 days that the tax remains unpaid, up to a maximum of 25%.
Partial Payment Agreement
If you are unable to pay the full amount of your tax liability, the Commissioner may allow you to pay the liability in installments over an extended period of time. You will be required to submit an application for a payment agreement that details your liabilities to be placed on the agreement and your current financial situation along with any supporting documentation that is requested. The Department of Revenue will place a lien on the taxpayer, business entity or personal guarantor to secure the interest of the state for the duration of the agreement. You must remain current with all other tax filings and payments that are due. If you fail to make a payment under the agreement, or fail to remain current with other taxes, you will be in violation of the agreement and the remaining amount owed may become immediately payable and due to the Department of Revenue.
Offer in Compromise
The Tennessee Department of Revenue may accept an Offer in Compromise (OIC) if it is determined that the tax liability cannot be collected in full and it is in the best interest of the taxpayer and the department to accept a lesser amount than what is due. If you wish to pursue the Offer in Compromise Program, you will be required to provide reasonable documentation as to your financial condition. In general, collection proceedings will be suspended while the offer is being considered, however interest and penalties will continue to accrue. While the offer is being considered, you must remain current with all other tax filings and payments. You may not submit an OIC as a means to delay collection or otherwise jeopardize the Department's capacity to collect the tax.
Representation and Power of Attorney
You have the right to be represented by an authorized person regarding tax matters with the State of Tennessee. To authorize someone on your behalf, complete and submit Form RV-F0103801 (Tennessee Department of Revenue Power of Attorney).