CS-OIC-5 - Determining the Offer Amount

The Offer in Compromise Application includes a worksheet to assist taxpayers in determining an acceptable offer. The Department will look at the taxpayer’s current income, assets, and allowable expenses to see how much the taxpayer can pay immediately and in installments over several years. Please see the instructions to the Offer in Compromise Application for more details about allowable expenses.

It is important to keep in mind that not all expenses are allowed. For example, the Department will not allow the taxpayer to count living costs that exceed standard living expense allowances under federal guidelines. Similarly, the Department will not usually allow the taxpayer to count debts that would not have priority over the State of Tennessee’s tax lien in a bankruptcy proceeding (this includes most credit card debt and student loan debt). The taxpayer must submit documentation for all allowable expenses claimed in the application.

Further, Offers tend to be successful when a taxpayer has demonstrated a good faith effort to pay their tax liability or, at minimum, adjust their lifestyle to tackle outstanding debts. The taxpayer should not expect a counteroffer from the Department. The Department does, on limited occasions, make counteroffers but only if the taxpayer’s initial offer is reasonably close to what the Department believes is acceptable based on the taxpayer’s financial information.

The Department understands that it can be hard for a taxpayer to know whether an expense is allowed. To be sure that no allowable expenses are missed, taxpayers should include current information about all their expenses in the application. The Department will review the information to verify that the taxpayer is being given credit for all allowable expenses.

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