An offer in compromise (OIC) is an agreement between the taxpayer and the Department of Revenue* to settle a tax liability for less than the full amount owed because the taxpayer has a verifiable inability to pay the full liability. The Department may accept an offer when it is unlikely that the Department will collect the tax liability in full, and the offer represents the most the Department can expect to collect over several years.
The Commissioner of Revenue is authorized under state law to compromise tax liabilities if a compromise is determined to be in the best interest of the State of Tennessee. Compromises may be subject to the approval of the Attorney General and Reporter and the Comptroller of the Treasury.
Reference: Tenn. Code Ann. § 67-1-102.
*The Tennessee Department of Revenue's Offer in Compromise Program considers tax debt owed to the State of Tennessee only and cannot take action on tax debt owed to the federal Internal Revenue Service (IRS). Taxpayers seeking to pay or compromise federal tax debt should contact the IRS directly.