Finding out you owe back taxes can add an unexpected burden to your life, especially when the notice shows up out of nowhere.
While Tennessee does not have a personal state income tax, plenty of Tennesseans still end up behind on business taxes, franchise and excise taxes, sales and use taxes, or property taxes. When these go unpaid, the penalties and interest add up fast.
What should I do if I owe back taxes in Tennessee? If you have received a notice from the Tennessee Department of Revenue or your local county trustee’s office, you have options. Here’s how to start getting things back under control.
Read the Notice and Identify What Type of Tax You Owe
Since Tennessee does not have an individual income tax, back taxes usually relate to other sources. The notice should tell you exactly what tax you owe, such as:
- Business taxes for anyone operating a business in the state
- Franchise & excise tax for corporations, LLCs, and certain partnerships
- Sales & use tax for retailers and service providers
- Property taxes that have been assessed by counties and cities
When you know which tax is due, that will help you determine the next step.
Verify the Amount Owed
Tax notices are not always mistake-free. Data entry errors, outdated records, or estimated assessments can inflate the balance.
You want to pull your past filings and compare the numbers. With that information, you can confirm whether the amount is accurate. If something feels off, you want to involve a professional tax attorney. Challenging an incorrect assessment is much easier when you catch it early in the process.
Never Ignore Penalties and Interest
Whether state business taxes or county property taxes, Tennessee adds penalties and interest quickly. A small balance can snowball into something overwhelming if you let it sit. Taking action early, even if you can’t pay in full yet, can save you a ton of stress and money in the long run.
Explore Your Payment and Relief Options
Depending on the type of tax and where it is owed, you may have options, such as:
- Payment plans with the Tennessee Department of Revenue
- Extensions or negotiated repayment for certain business taxes
- Property tax relief or installment programs through your county
- Penalty waivers in qualifying circumstances
Each tax type has its own rules, and that can get confusing. An attorney can help you figure out the most strategic path forward for your situation.
What If You Also Owe Federal Back Taxes
Many Tennesseans discover state or local tax issues and realize they have fallen behind with the IRS as well.
Federal back taxes are a whole different beast. The IRS has wide collection powers, including wage garnishment, bank levies, and tax liens. Unfortunately, they do not hesitate to use them once a taxpayer becomes delinquent.
But there is good news. The IRS also offers structured programs to help taxpayers get back on track, including:
- Installment agreements
- Offer in Compromise (OIC)
- Penalty abatement
- Fresh Start Program options
- Currently Not Collectible status
If you owe both state-related taxes and federal taxes, you need to approach them strategically so one doesn’t disrupt your ability to resolve the other.
Talk to a Tennessee Tax Attorney Before Things Escalate
Back taxes will not magically disappear. But with the right plan, you can stop the spiral of penalties and collection efforts and regain control over your finances.
You need a Tennessee tax resolution lawyer who can help you:
- Understand the true amount you owe
- Negotiate with the Tennessee Department of Revenue or county officials
- Address IRS debt and avoid aggressive federal collection actions
- Build a plan that protects your income, assets, and peace of mind
Get Help for All Your Back Taxes
So, what should I do if I owe back taxes in Tennessee? The most important thing to do is not to wait. Tackling this issue early can help you avoid penalties and other consequences of back taxes.
If you are looking for assistance to resolve your tax issues, Easter & DeVore, Attorneys at Law, are ready for your call. We can help you find an option to resolve your tax problems so you can look forward to the future. Reach out today to schedule a consultation.
