Tennessee Balance Due Notice: What It Means & How to Respond

Receiving a Tennessee Balance Due Notice from the Tennessee Department of Revenue can be unsettling, especially if you are unsure why it arrived. This notice means the state’s revenue agency believes you owe unpaid taxes, such as sales, business, franchise, and excise taxes. While it may feel stressful, understanding what the notice means and taking prompt action can help you resolve it efficiently—and often prevent additional penalties or collection efforts.

A Balance Due Notice is more than a reminder to pay. It’s an official communication that outlines the amount owed, the tax type involved, and the deadline for payment or response. The notice includes details such as a Letter ID, contact information, and payment instructions. Whether the issue stems from a missing return, an underpayment, or an error in reporting, responding quickly helps you avoid interest charges and potential enforcement actions by the department.

This article explains everything you need to know about handling a Tennessee Balance Due Notice. You’ll learn what the notice looks like, why it’s issued, and what steps to take to verify its authenticity. We’ll also cover available options for resolving your tax debt, including payment plans, penalty waivers, and other forms of tax relief the state offers. With the correct information and a timely response, most taxpayers can resolve their situation and return to excellent standing with the department.

What Is a Tennessee Balance Due Notice?

A Tennessee Balance Due Notice is an official letter from the Tennessee Department of Revenue (DOR) informing a taxpayer or business that state taxes remain unpaid. It formally records the amount owed and outlines the steps to correct the balance. The notice specifies the tax type, the due amount, and the deadline for payment or response.

This correspondence comes from a state government agency, not the Internal Revenue Service (IRS). The IRS collects federal taxes, such as income and employment taxes. At the same time, the Tennessee Department of Revenue manages state-administered taxes that directly support local and statewide services. When you receive a Tennessee Balance Due Notice, it concerns taxes owed to the state—not the federal government.

Tennessee’s tax system includes several primary categories, each applying to specific types of transactions or business activities:

• Sales and Use Tax: This tax applies to most retail transactions in Tennessee. Businesses are responsible for collecting this tax from customers on taxable sales and remitting it to the state. A use tax may also apply when goods are purchased outside Tennessee but used, stored, or consumed within the state.
• Business Tax:  This tax is required for most companies operating in Tennessee, including retail, service, and wholesale businesses. It is based on gross receipts, which applies to the company's total revenue. Every business engaging in taxable activity within the state must register, file, and pay this tax annually.
• Franchise and Excise Tax: This tax is assessed on corporations, limited liability companies, and certain partnerships. The franchise tax is calculated on a business’s net worth or the value of its real and tangible property in Tennessee, while the excise tax is based on net earnings. Together, these taxes support essential public programs and state operations.
• Professional Privilege Tax: This annual tax applies to individuals practicing specific licensed professions, such as attorneys, accountants, and doctors. Each professional subject to this tax must pay a flat yearly fee to maintain compliance with Tennessee’s licensing and regulatory requirements.

Each tax type is governed by Tennessee law and administered by the Department of Revenue. Understanding which taxes apply to your situation helps ensure timely filing and payment, reducing the risk of receiving a future Balance Due Notice.

Key Elements of a Legitimate Notice

When you receive a Tennessee Balance Due Notice, take time to confirm that it is authentic. A genuine notice always contains:

• The Tennessee State Seal appears clearly at the top of the document.
  
  
• A Letter ID number that begins with the letter “L” followed by nine digits.
  
  
• The document also has the official contact information for the Department of Revenue, such as the phone number and mailing address.
  
  
• A detailed statement of the amount owed, showing the tax type, interest, and penalties.
  
  
• The notice should include payment instructions, a precise due date, and directions for making payments or submitting documents.

Sample Notice Layout (Overview)

A typical notice layout generally includes the taxpayer’s name and account number, the assessment period covered, a complete summary of the tax, interest, and penalties owed, and the department’s contact information for questions or payment plan requests. For official examples and additional information, visit the Tennessee Department of Revenue.

Why Did You Receive a Balance Due Notice?

Receiving a Tennessee Balance Due Notice can be confusing, especially if you believe you have already paid your taxes. However, there are several common reasons why the Tennessee Department of Revenue issues these notices. Understanding the cause helps you determine how to respond correctly and avoid additional penalties or interest.

Unfiled or Missing Tax Returns

You may receive a notice if you failed to file one or more required tax returns. When this occurs, the department may create an estimated assessment based on available information such as past filings, third-party data, or reported business activity. This process ensures that taxes are still assessed even when returns are not submitted on time. Filing the missing returns quickly can help reduce your balance and stop further enforcement actions.

Unpaid or Underpaid Taxes

The department will issue a balance due notice if you filed your return but did not pay the full amount owed. Common causes include payment errors, insufficient funds, or underestimating quarterly tax payments. Sometimes, interest and penalties accrue immediately after the due date if the full payment is not received.

Data Matching and Audit Adjustments

The department participates in several data-sharing programs with federal and state agencies to ensure tax compliance. These programs may generate a notice if they uncover unreported income, mismatched records, or discrepancies between your federal and state filings. Such an event could also occur after an audit identifying additional tax liability for businesses.

Penalties and Interest

Penalties and interest are added to unpaid balances as required under Tennessee tax law. A late filing penalty is typically 5% per month, up to a maximum of 25% of the unpaid tax. A late payment penalty may also apply at the same rate, and interest continues to accrue daily until the balance is paid in full.

For a complete list of Tennessee taxes and compliance requirements, visit the Tennessee Department of Revenue’s tax information page.

What Happens If You Ignore a Tennessee Balance Due Notice?

Failing to respond to a Tennessee Balance Due Notice can have serious financial and legal consequences. The Tennessee Department of Revenue (DOR) has the authority to enforce the collection of unpaid taxes through penalties, garnishments, liens, and property seizures. Understanding these potential outcomes can help you take timely action and prevent further hardship.

Escalation of Collection Actions

When a taxpayer does not respond by the due date listed on the notice, the department begins progressive collection measures:

• Additional notices are issued to the taxpayer to remind them of the unpaid balance and urge payment.
  
  
• Penalties and interest accumulate with each missed deadline, increasing the overall debt.
  
  
• After multiple reminders, the Collection Services Division becomes involved once the balance remains unpaid. This division has the authority to pursue more direct recovery methods.
  
  
• Consistent communication with the department can prevent escalation. Taxpayers who reach out early often qualify for payment arrangements or penalty relief.

Wage Garnishment and Bank Levies

If the balance remains unpaid, the department may enforce collection by taking funds directly from income or bank accounts:

• Wage garnishment allows the department to contact your employer and deduct payments directly from your paycheck.
  
  
• Bank levies enable the department to withdraw money from your account without requiring a court order.
  
  
• If the taxpayer operates a company or generates ongoing revenue, the department may also target accounts receivable and business income.
  
  
• These actions persist until you settle the entire debt, which includes penalties and accrued interest.

Tax Liens and Property Seizures

Under Tennessee Code Annotated §67-1-1701, the department may place a lien against your property if the debt remains unresolved:

• A state tax lien automatically attaches to all property in Tennessee, including homes, vehicles, and business assets.
  
  
• A recorded lien can impact your credit score, making it difficult to obtain loans, refinance property, or sell assets.
  
  
• If the debt continues unpaid, the department may seize and sell property to recover the outstanding amount.
  
  
• These actions can have lasting financial effects, but they can be avoided by contacting the department promptly to set up a payment plan or request tax relief options.

Step-by-Step Guide: How to Respond to Your Notice

When you receive a Tennessee Balance Due Notice, taking immediate, organized action is the best way to prevent additional penalties and collection efforts. The Tennessee Department of Revenue outlines a straightforward process for verifying, reviewing, and resolving your account. Following these steps helps ensure you remain in good standing and avoid further enforcement.

Step 1 – Verify the Notice’s Authenticity

Confirm that the notice is legitimate before paying or sharing personal information.

• Ensure that the document displays the Tennessee State Seal and official department letterhead, as these are signs of authenticity.
  
  
• Locate the Letter ID number, which should begin with the letter “L” followed by nine digits.
  
  
• Review the contact information on the notice to ensure it matches the official contact details provided by the department.
  
  
• To confirm that the letter is genuine, contact the department directly at the number on the notice or through its website.

Step 2 – Review Your Tax Records

Collect your financial and tax documentation to verify the accuracy of the amount due.

• Collect filed returns, payment confirmations, and past correspondence with the department.
  
  
• Compare the balance listed on the notice to your records to identify discrepancies or missing payments.
  
  
• Review the tax period and type listed to determine whether the notice pertains to sales, business, or franchise and excise taxes.

Step 3 – Access Your TNTAP Account

The Tennessee Taxpayer Access Point (TNTAP) provides a secure online system for managing tax obligations.

• Log in at tntap.tn.gov using your registered credentials.
  
  
• Review your account summary and payment history to confirm the balance due.
  
  
• You can submit your payment online using the “Make a Payment” option or request a payment plan if you cannot pay in full.
  
  
• Verify that all required tax returns are filed. Unfiled returns can delay payment processing or result in additional penalties.

Step 4 – Determine Your Response Strategy

After verifying your records, decide how to proceed.

• If you agree with the assessment, you can pay the amount in whole or request a payment plan online through TNTAP.
  
  
• If you have any concerns, contact the department as soon as possible to discuss the matter and share any supporting documents.
  
  
• If you believe there is an error in the balance, provide copies of returns or proof of payment, accompanied by a written explanation.

Step 5 – Act Before the Deadline

Timely action is essential to prevent enforcement.

• Respond by the due date specified on the notice, even if you are disputing the balance.
  
  
• Maintain open communication with the department. Cooperation can help you qualify for penalty abatement or tax relief options.
  
  
• Keep copies of all correspondence and payment records for your files if questions arise later.

Taking these steps promptly shows good faith and may help avoid liens, garnishments, or other collection actions.

Resolution Options for Tennessee Tax Debts

When you owe taxes to the Tennessee Department of Revenue and cannot pay the full amount immediately, the state provides several programs to help you manage your tax debt responsibly. These programs allow you to avoid collection actions such as liens, garnishments, or property seizures by demonstrating a good-faith effort to resolve what you owe.

1. Installment Payment Plans

An installment payment plan allows taxpayers to spread their balance over time through monthly payments rather than one large lump sum.

• Eligibility requirements include owing at least $300 and being current on all required tax filings.
  
  
• Payment terms usually range from two to sixty months, depending on the amount due and your financial capacity.
  
  
• A minimum monthly payment of $50 is required, and most plans use automatic bank drafts to ensure timely payments.
  
  
• Taxpayers can apply through the Tennessee Taxpayer Access Point (TNTAP) by selecting “Request Payment Plan.”
  
  
• If you have defaulted on a prior plan, the department may require a down payment before approving another.

Penalty Waiver Requests

Taxpayers may request penalty abatement when they prove their failure to file or pay was due to reasonable cause.

• Valid reasons include serious illness, death in the immediate family, or natural disasters that made compliance impossible.
  
  
• Taxpayers with a strong two-year filing history may qualify for consideration even if no emergency occurred.
  
  
• Requests can be made online through TNTAP or by submitting Form F1322701 (Petition for Waiver of Penalty).
  
  
• Supporting documentation, such as medical records or official correspondence, must be included.
  
  
• Penalty waivers exceeding $100,000 require approval from the Tennessee Attorney General’s Office.

Offer in Compromise (OIC)

The Offer in Compromise program allows financially distressed taxpayers to settle their liabilities for less than the total owed.

• Applicants must show financial hardship, proving that paying the full balance would cause severe difficulty.
  
  
• Forms required include F0200501 (OIC Application) and CS-14B or CS-14C, depending on whether you are an individual or a business.
  
  
• All required tax returns must be filed before applying, and the taxpayer cannot be bankrupt.
  
  
• The department accepts offers only when the proposed amount represents the maximum it could reasonably collect within three to five years.

Voluntary Disclosure Program

The Voluntary Disclosure Program allows taxpayers with unreported liabilities to resolve them proactively and reduce penalties.

• The department must not have contacted applicants about the issue before applying.
  
  
• The program offers a limited look-back period and potential penalty reduction, encouraging voluntary compliance.
  
  
• Email voluntary.disclosure@tn.gov or contact the Department’s Disclosure Unit to start the process.

Temporary Hardship Considerations

If paying your balance would cause significant hardship, the department may temporarily suspend collection actions.

• You must provide supporting documents such as income statements, medical bills, or proof of unemployment.
  
  
• Requests should be directed to the Collection Services Division, which evaluates eligibility and determines whether relief can be granted.

Each option provides a path toward resolution while maintaining compliance with state tax laws. Acting promptly and communicating with the department demonstrates responsibility and can help you avoid further financial consequences.

Real-World Example: How a Taxpayer Resolved a Tennessee Balance Due Notice

This case study shows how a small business managed a Tennessee Balance Due Notice through organization, documentation, and timely communication with the state’s revenue department.

A small business experienced several months of financial strain, leading to missed sales tax filings and unpaid balances. When a Balance Due Notice arrived, the business owners realized they were subject to penalties and interest. Rather than ignore the notice, they reviewed official guidance to understand their options and took corrective action.

Steps Taken by the Taxpayer:

• The business owners reviewed official resources to learn how to pay taxes and correct missed filings.
  
  
• They filed all overdue tax returns promptly through the state’s online system, ensuring their account information matched prior records.
  
  
• They submitted supporting documentation, such as payment confirmations and bank statements, to show good-faith compliance.
  
  
• After confirming they were among the eligible taxpayers for a program that postpones tax relief to help affected taxpayers recover from financial disruption, they requested a payment agreement.
  
  
• The department approved a structured payment plan, confirming the taxpayer remained eligible under program guidelines.

Outcome:

• A new law permitted small businesses demonstrating legitimate hardship to extend repayment periods without incurring additional penalties, provided they maintained current filings.
  
  
• The taxpayer made consistent payments according to the agreement, and an account review later revealed an overpayment, resulting in a small refund.
  
  
• The department recognized the taxpayer's reasonable good-faith effort to comply and confirmed that the account was settled.
  
  
• The taxpayer avoided liens, levies, and other enforcement actions by following the rules and taking action. They were still able to serve clients without any problems.

This case highlights how early action and communication lead to positive outcomes. Acting quickly and providing complete documentation allows taxpayers in Tennessee to regain compliance, safeguard their business operations, and access available relief options.

Resources and Contact Information

All taxpayers in Tennessee can manage their tax accounts, make payments, and file returns through the Tennessee Taxpayer Access Point (TNTAP). The portal allows users to verify balances, upload supporting documents, and request payment plans. In cases where tax relief postpones collection or enforcement due to financial hardship, taxpayers should maintain regular contact with the department to confirm eligibility and next steps.

For phone assistance, taxpayers may contact

• General Information: (615) 253-0600
  
  
• Collections and Payment Plans: (615) 741-7071 or (844) 729-8689
  
  
• Penalty Waiver Requests: penalty.waivers@tn.gov
  
  
• Voluntary Disclosure and Special Cases: voluntary.disclosure@tn.gov

If your business or home is in a disaster area, the department may provide additional benefits such as extended filing deadlines or penalty relief. Taxpayers should notify the department of their county of residence and include documentation supporting their situation.

Those seeking to waive penalties or request relief should submit complete explanations of their circumstances, including any recent employment or income level changes. Each request is reviewed carefully to determine eligibility for available state programs. By using official contact channels and providing complete documentation, taxpayers can resolve their balances responsibly and maintain compliance with Tennessee tax law.

Frequently Asked Questions (FAQs)

What does a Tennessee Balance Due Notice mean?

A Tennessee Balance Due Notice is an official letter from the Tennessee Department of Revenue that informs you about unpaid state taxes. It lists the balance, penalties, and due date for payment. The notice may apply to individual, business, or excise tax accounts. Reviewing the details promptly helps prevent additional penalties or interest from accruing on your outstanding balance.

What options are available for taxpayers seeking tax relief?

Tennessee provides several tax relief programs for individuals and businesses who cannot fully pay their balance. Options include installment payment plans, penalty waivers, and hardship consideration for financial difficulties. These programs help eligible taxpayers resolve debts while avoiding enforced collection actions such as garnishments or liens. Acting early and submitting complete documentation improves approval chances.

Can affected taxpayers request more time to pay their balance?

Yes, affected taxpayers who experience financial hardship, illness, or unexpected events may request a short extension or apply for a payment plan. The department evaluates each case individually and may allow additional time if reasonable cause is demonstrated. To avoid further penalties or interest, communicating and submitting required documents before the due date is essential.

How do I set up a payment plan online?

You can request a payment plan online through the Tennessee Taxpayer Access Point (TNTAP). This secure system allows taxpayers to review account balances, select payment terms, and authorize automatic drafts. Depending on the balance owed, plans typically range from two to sixty months. Confirming that all returns are filed before applying ensures faster approval.

How does penalty abatement work?

Penalty abatement allows the department to reduce or remove penalties when you can show reasonable cause for late filing or payment. Examples include illness, natural disasters, or system errors that prevented timely compliance. Taxpayers must provide documentation such as financial records or correspondence explaining their situation. Approved requests lower the total amount due and stop future penalties from accruing.