Tennessee Payroll Tax Nonpayment Emergency
Checklist
Introduction
Tennessee employers must pay unemployment insurance taxes to the Tennessee Department of Labor & Workforce Development on a quarterly schedule. These taxes fund unemployment benefits for workers who lose their jobs through no fault of their own.
Tennessee has no state income tax on wages and does not require employers to withhold state income tax from employee paychecks. Unemployment insurance tax obligations are separate from federal payroll taxes, such as FICA taxes and federal income tax withholding.
What This Issue Means
Unemployment insurance tax nonpayment occurs when an employer fails to submit required quarterly tax payments to the Tennessee Department of Labor & Workforce Development by the deadline. Employers become liable for unemployment insurance taxes when they pay $1,500 or more in wages during a single calendar quarter or have at least one employee during twenty different weeks in the current or preceding calendar year. An eight-digit employer account number is assigned when liability begins, and all payments are tracked through this system.
Why the State Issued This or Requires This
Tennessee law requires employers to pay unemployment insurance taxes to maintain the state’s unemployment trust fund. Employers must file quarterly tax reports and payments by the last day of the month following the end of each calendar quarter. The taxable wage base determines how much of each employee's earnings is subject to unemployment insurance tax. This amount changes annually based on the state's unemployment trust fund solvency.
What Happens If This Is Ignored
Collection of delinquent unemployment insurance taxes follows a documented escalation process managed by the Tennessee Department of Revenue. Within this process, the state first issues a Notice of Proposed Assessment that allows thirty days for response—failure to respond results in a Final Demand Letter and the creation of a collection case.
A revenue officer attempts to contact the liable party to resolve the liability. If the debt remains unpaid, an Intent to Levy/Lien Letter arrives with a specific date for enforcement action. At that point, the state may file a tax lien against business and personal property, pursue a tax levy through wage garnishment or bank account seizure, and report the debt to credit agencies.
What This Does NOT Mean
A late payment does not automatically trigger a state tax lien filing. Formal collection procedures and written notice must occur before a tax lien can be filed. Asset seizure and tax levy actions cannot proceed until the Tennessee Department of Revenue completes the required notice sequence and provides a specific enforcement date.
Checklist: What to Do After Receiving This or Identifying
This Issue
Step 1: Gather all notices from the Tennessee Department of Revenue
Collect every notice related to unemployment insurance tax debt. Include balance due statements, demand letters, and collection notices. Review each document to identify the specific quarters that remain unpaid and any deadlines mentioned.
Step 2: Verify which quarters are unpaid
Review your business records to confirm which calendar quarters have unpaid unemployment insurance taxes. Cross-reference these quarters with amounts listed in state notices. Access the
Tennessee website to view your account history and verify the accuracy of reported wage base calculations for each quarter.
Step 3: Calculate your current total debt
Add all unpaid amounts from state notices, including original tax, penalties, and interest.
Penalties accrue at 5% per month, up to a maximum of 25%.
Interest accrues at 11.50 percent annually from July 1, 2025, through June 30, 2026. Note that interest continues to accrue until full payment, so that the final amount will exceed the balance shown on any dated statement.
Step 4: Contact the Tennessee Department of Revenue
Call (615) 253-0600 or the statewide toll-free number (800) 342-1003 to request a current
account statement. Provide your eight-digit employer account number. Request written confirmation of the exact amount owed and ask whether wage base calculations were applied correctly for each quarter.
Step 5: Document all communication
Record the date, time, and name of each Department of Revenue employee you speak with.
Write down the substance of conversations, including information requested and provided. Keep copies of tax returns filed for affected quarters and all written responses from the state.
Step 6: Review payment options
Ask about accepted payment methods, including online payment through Tennessee Taxpayer
Access Point, check, electronic funds withdrawal, or credit card. Inquire whether installment agreements are available for your specific situation. Visit the Tennessee website to access the
Tennessee Taxpayer Access Point and review your account details before making payment decisions.
Step 7: Request an informal conference if amounts are disputed
If you believe the assessed amount is incorrect, request an informal conference within thirty days of receiving a Notice of Proposed Assessment. Call (615) 741-3810 to request a conference or determine if your issue can be resolved without one. Disputes may involve incorrect applications, miscalculated amounts, or reporting errors for specific quarters.
Step 8: Establish a payment plan or pay in full
Complete required forms or provide payment authorization as directed by the state. Obtain written confirmation of any installment agreement terms and schedule. Payment plans can be requested only by the master Tennessee Taxpayer Access Point account holder. Missing any scheduled installment payment terminates the plan and reactivates complete collection procedures, including the potential filing of a tax lien.
- State enforcement notices and responses
- Sales tax audits, assessments, and collections
- Payroll & trust fund tax enforcement issues
- Penalty and interest reduction options
- Payment plans and state tax relief eligibility
- Representation before state tax agencies
Step 9: Maintain current quarterly filings
Ensure all new unemployment insurance tax payments for current quarters are submitted on time. Missing deposits on new taxes while addressing past debt worsens the situation and may
result in termination of any payment plan. File accurate tax returns with correct information for all current quarters to avoid additional penalties.
Common Mistakes to Avoid
Failing to respond to notices from the Tennessee Department of Revenue can cause collection actions to escalate automatically. Paying partial amounts without an approved installment agreement does not stop collection procedures.
Continuing to miss current quarterly payments while addressing old debt compounds the problem and demonstrates ongoing noncompliance. Failing to document payments or communications deprives you of the ability to prove what was paid or promised. Submitting incomplete tax returns or miscalculating the taxable wage base for any quarter creates additional compliance issues that delay resolution.
Frequently Asked Questions
Can the state file a tax lien against my personal assets?
Tennessee law allows a tax lien to attach to all property in Tennessee, whether real, personal, tangible, or intangible. Contact the Department of Revenue directly to understand how a tax lien applies to your specific situation. Once filed, a tax lien remains effective for ten years from the date of filing unless renewed.
Will establishing a payment plan prevent a tax lien from being filed?
The state does not clearly address whether approved payment plans prevent tax lien filing. Ask the Department of Revenue whether your payment plan will prevent or suspend collection action, including tax lien placement.
How often does interest accrue on unpaid debt?
Interest accrues continuously at the annual rate set by the Tennessee Department of Revenue.
The current rate is 11.50 percent for the period from July 1, 2025, through June 30, 2026.
What happens if I move out of Tennessee or close my business?
Unemployment insurance tax debt follows you regardless of location or business status. The
Department of Revenue can pursue collection actions against you personally as well as against the business.
How does the wage base affect my quarterly payments?
The wage base limits the amount of each employee's earnings subject to unemployment insurance tax each year. Labor and Workforce Development publishes this amount annually.
You must apply the correct calculations when preparing Wage Report submissions to ensure accuracy.
Facing State Tax Enforcement Action?
If you’ve received a notice related to sales tax or payroll tax enforcement, and aren’t sure how to respond, our team can help you understand your options and next steps.
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