Offer In Compromise Application - Tennessee Department Of Revenue Page 2
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OIC-1 INSTRUCTIONS
OFFERS IN COMPROMISE: GENERAL INFORMATION
The Tennessee Department of Revenue's Offer in Compromise program allows a taxpayer to settle a tax
liability for less than the total amount owed. Generally, the Department will accept an offer in
compromise only if the amount offered represents the most the Department can expect to collect over
a 3-5 year time frame. The Attorney General and Reporter and the Comptroller of the Treasury must
approve compromises over a certain amount.
Basic Requirements. The Department will process an offer in compromise application only if the
taxpayer:
Is not the subject of an open or active bankruptcy case
Has filed all required tax returns and reports
Has fully completed the offer in compromise application
Has provided all supporting documentation
Has responded fully to all requests for additional information and documentation
Factors Considered. Although the Department evaluates each case based on its own unique set of facts
and circumstances, the Department gives the following factors strong consideration:
The taxpayer's ability to pay, both immediately and over time
The amount of equity in the taxpayer's assets
The taxpayer's income and allowable expenses
The potential for changed circumstances
The likelihood the taxpayer will comply with tax laws in the future
Whether a compromise is in the best interest of the state
The Offer. Generally, the amount the taxpayer offers must represent the maximum amount the
taxpayer can pay, either immediately or over a 3-5 year time frame.
The offer in compromise application includes a worksheet to assist taxpayers in determining an
acceptable offer.
Not all expenses are allowed. The Department utilizes federal guidelines for Tennessee to
determine allowable household and personal expenses. The Department will not allow excessive
expenses or expenses related to debts that would not have priority over the State’s tax lien in a
bankruptcy proceeding.
The Department recognizes that each taxpayer’s circumstances are unique. The taxpayer can
ask the Department to consider special circumstances that might affect the taxpayer’s ability to
pay (for example, a serious long-term illness).
The Department will give the taxpayer an opportunity to complete, supplement, or correct an
application where it appears the taxpayer made a good faith effort to provide all required
information and documentation.
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