Tennessee Trust Fund and Payroll Tax Payment Plan
Checklist
A payment plan is a written agreement between you and the Tennessee Department of
Revenue that lets you pay taxes owed over time instead of in one lump sum. Tennessee
Department of Revenue payment plans generally apply to Tennessee-administered tax liabilities, such as sales tax and other state tax types listed in the department’s installment payment agreements materials.
Your business may collect trust fund taxes for remittance, and Tennessee treats those funds as money held for others rather than business revenue. When you do not have a payment plan in place, the state may use tax collection enforcement tools, including tax lien filings, bank levies, license suspension, and actions that may create personal liability even when you operate as a corporation.
Who This Checklist Is For
This checklist is for business owners and operators who meet these conditions
- Unpaid taxes administered by the Tennessee Department of Revenue remain
outstanding for one or more tax periods, and tax collection notices have been issued showing the balance due.
- Paying the full amount in a single payment is not currently possible, and avoiding
enforcement activity tied to delinquent taxes is a priority.
Payment plans are not available in these situations
- An outstanding criminal arrest warrant related to tax evasion or another criminal matter
exists, and separate criminal processes govern how those issues are handled.
- Required tax returns remain unfiled, or current obligations continue to fall behind after a
payment plan request is submitted.
Payment Plan Steps
Step 1: Verify the amount owed and the type of tax by contacting the Tennessee Department of
Revenue and requesting a detailed account statement that lists the tax period, penalties, interest, and any interest calculations already applied.
Step 2: Record your notice number, account reference, and the name of the department
representative you spoke with, and rely on that account statement rather than estimates from collection calls.
Step 3: Confirm your current filing and payment status by verifying that you filed all required
Tennessee Department of Revenue returns and that you stayed current on ongoing obligations.
Step 4: Bring all missing tax returns up to date before you request a payment plan, because the
state generally will not approve a plan when you remain out of compliance.
Step 5: Gather required financial documentation, including your most current federal income tax
return for the business and for you personally when applicable, plus your most current two months of bank statements for all relevant personal and business accounts.
Step 6: Add supporting records that show current balances and payment schedules for loans
and other debts, and keep any additional documentation the Tennessee Department of
Revenue requests in the installment payment agreements materials.
Step 7: Calculate what you can afford to pay monthly by reviewing cash flow, fixed expenses,
and required current payments, and choose a monthly amount you can sustain during the full plan term.
Step 8: Call the Tennessee Department of Revenue Collections, Bankruptcy, and Payment Plan
Questions line at (844) 729-8689 or (615) 741-7071 and request to set up a payment plan for
Tennessee-administered tax liabilities.
Step 9: Ask for the installment payment agreement application materials, including Form APP-1
and any required financial disclosure forms, and complete every field accurately to avoid rejection or cancellation.
Step 10: Submit Form APP-1 with supporting documents by the method the Collections Division
provides, including a brief cover letter stating your proposed monthly payment and start date, and keep copies of everything you send.
Step 11: Wait for written approval before you treat the agreement as active, because the
Department will send an approval letter that states your payment amount, due date, and payment options, or it will send a denial letter explaining the reason.
- Automatic payment should be scheduled only when the account can be funded reliably,
- Each payment confirmation number should be logged, and records should be kept
- Significant changes in business circumstances require prompt contact with the
- Individual Income Tax Problems (Unfiled Returns, Back Taxes, Audits)
- Sales Tax Issues (Past-Due Filings, State Notices, Compliance Help)
- Trust Fund & Payroll Tax Relief (941 Issues, Penalties, Enforcement Actions)
- Resolution Support (Payment Plans, Settlements, Penalty Abatement)
- Help Stopping Collections (Liens, Levies, Wage Garnishments)
Step 12: Make each payment on the agreed date and continue filing and paying current payroll
taxes on time, then request a payment plan status letter annually and confirm the final payment amount as you approach payoff so you can request written confirmation that the debt is satisfied.
State-Specific Rules & Gotchas
Tennessee enforces state tax liens aggressively, and the notice of lien and any renewal can remain effective for ten (10) years from the date of filing. The Department may renew a lien notice before it expires, and the lien can attach broadly to your property interests in Tennessee.
State tax law can also allow the department to pursue certain individuals and other businesses for specific business tax liabilities under responsible party and related theories. You should treat trust fund obligations as high-risk debts because personal exposure can arise from the facts of control, payment authority, and failure to remit.
Default terms matter, so read your written agreement carefully and track due dates with a system you will follow every month. When you miss a payment or violate the agreement, the
Department may treat the remaining balance as immediately payable, and additional penalty assessments and interest accrue based on the account status.
Common Mistakes to Avoid
1. Ignoring the initial notice increases the chance of escalated enforcement activity, and early contact often gives you more payment options.
2. Proposing an unrealistic monthly payment can trigger default, and a missed payment may lead to renewed collection notices and accelerated action.
3. Failing to file current tax returns while on a plan breaks compliance requirements, and the state may cancel the agreement and add new debt.
4. Skipping written confirmation leaves you without proof of terms, and you should keep the approval letter with your records for the full plan period.
5. Paying late can jeopardize the agreement, and you should call the Collections Division before the due date when you anticipate a problem.
6. Not updating the state after a closure or ownership change can increase personal risk, and the department needs accurate status details to apply the account correctly.
What Happens After the Payment Plan Is Approved
The Tennessee Department of Revenue will send a written agreement that lists your monthly payment amount, due date, and approved payment options, and you must follow those terms exactly. Ongoing compliance remains mandatory during the plan, and a missed payment or a violation may allow the Department to demand immediate payment of the remaining balance with added penalties and interest.
Use these practices to keep the agreement in good standing: and the withdrawal date aligns with the agreement terms. showing how the department applied payments to specific tax periods.
Collections Division, because modifications may trigger a new financial review and may not receive approval.
Next Steps
Review this checklist and organize your documentation before you call, because preparation helps you answer questions about tax liabilities, filing history, and the payment amount you propose. Contact the Tennessee Department of Revenue Collections Division at (844) 729-8689 or (615) 741-7071 to confirm eligibility, request Form APP-1, and discuss enforcement risks such as wage garnishment, tax levy actions, and property lien filings when your account remains unresolved.
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