Tennessee tax payment plan for business tax debts

What kinds of Tennessee taxes are placed on a plan?

Tennessee charges nothing on wages and ended the Hall tax that applied to interest and dividends, for tax periods starting January 1, 2021. Debts of this kind arise from sales and use tax, from business franchise and excise tax and from other state taxes.

Sales tax is the largest of these debts. The Department’s website for sales and use tax puts the general state rate at 7%, plus a local rate. When taxable goods enter the state and a seller fails to collect sales tax, use tax applies. Individuals are also responsible for paying it.

Rules for Tennessee installment payment plans

You can put any balance owed to the Department on a plan, including audit bills and accounts closed right now. Its down payment help article explains the Department’s two firm conditions. A down payment is not required when you have never had a plan. You must put 25% down to be considered when you had at least two plans in the past two years.

Submit all returns covered by the plan before requesting it. When no return was filed and the Department had to estimate the period, any plan covering it will be ended.

Setting up the plan in TNTAP

Requests go through TNTAP, the Tennessee Taxpayer Access Point. The request guide walks through these steps:

• After logging in, open More and select Request a Payment Plan
• Pick the first installment date, then choose the number of payments or the amount of each payment.
• Add a down payment when you want one, then review the forecast schedule.
• Provide your bank information for automatic withdrawals, then read the payment agreement.
• When you submit the request, enter your password as an electronic signature.

Interest and penalty for what you owe

Interest on installment agreements carries a higher rate in Tennessee than on other unpaid tax. A rate through June 30, 2026 of 11.50% applies to unpaid tax, while installment agreements carry 13.25%, according to the Department’s penalties and interest article. A late payment adds a monthly penalty of 5% on the unpaid balance, with a limit of 25%.

State law identifies reasonable causes for a waiver. Penalties may also be waived if your filing record has been clean for two years. To request a waiver in TNTAP, use the penalty waiver process.

New bills, unpaid draft payments and liens

An existing plan cannot take on a new bill and the bill does not roll into it. Submit each new return and make payment on time. Make sure all monthly drafts clear. If either is missing, the plan enters pending default. Make the correction by the date shown in the Payment Plan Default letter. When the plan ends, the Department says the full balance is due and collection begins immediately.

Tax liens may result from unpaid balances. This public claim is filed with the register of deeds for the county. According to the lien release rules, a lien continues while you take part in a plan and remains until the whole balance is settled. Collection Services also handles levies and wage garnishment for unpaid accounts.

IRS payments, as well as Offers in Compromise

Settling for less than the whole debt is possible through Offers in Compromise and Tennessee accepts those offers too. Your income, assets and allowed expenses form the basis. Sending an offer does not stop collection. The offer guidance notes that Collection Services is able to arrange a short-term plan while an offer is being reviewed.

Federal tax is dealt with on its own. An IRS balance needs its own agreement. A Tennessee business that owes both therefore continues with two draft schedules.

Nearby states

• Kentucky
• North Carolina
• Georgia
• Alabama
• Mississippi
• All states