This article has been updated to provide additional information regarding informal conferences.
Any taxpayer who believes that they cannot pay a tax liability in full immediately, or in installments through an installment payment plan, may submit a completed Offer in Compromise Application to the Department. The application can be found on the Department's website in the Tax Delinquencies section, which may be accessed here.
Please be aware that the Department cannot process an Offer in Compromise Application from a taxpayer who is the subject of an open or active bankruptcy case. In this case, the taxpayer should submit the offer through the bankruptcy proceeding instead.
If the taxpayer is in the process of requesting an informal conference or has an ongoing conference request, the taxpayer should wait until the conference decision is reached and provided to the taxpayer via letter. After the decision is received, the taxpayer may choose to apply for an Offer in Compromise.
Also, the Department will process an Offer in Compromise Application only if the taxpayer:
- Has filed all required tax returns and reports;
- Has fully completed the Offer in Compromise Application;
- Has provided all supporting documentation; and
- Has responded fully to all requests for additional information and documentation.
If the tax liability includes taxes collected but unremitted to the state, such as sales tax; or if the taxpayer has a history of tax fraud or fraudulent behavior, this negatively affects the chances that an Offer will be accepted.
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.
Note: This article was updated on July 5, 2022. The previous version of CS-OIC-2 is available here.