Tax Audit Protest and Appeal — Tennessee

Tax Audit Protest and Appeal (TENNESSEE)

Quick-Reference Summary

Part A — Informal Conference Request Letter

Sender Letterhead

[LAW FIRM OR TAXPAYER NAME]
[Street Address]
[City], Tennessee [ZIP]
Telephone: [(___) ___-____]
Email: [______________________]
[TN Bar BPR No. (if attorney): ____________]

Date and Recipient

Date: [__/__/____]

VIA CERTIFIED MAIL, RETURN RECEIPT REQUESTED
AND VIA EMAIL TO: [email protected]

Hearing Office
Tennessee Department of Revenue
500 Deaderick Street
Nashville, TN 37242

Re Block

Re: Request for Informal Conference under Tenn. Code Ann. § 67-1-1438(b)
Taxpayer: [TAXPAYER LEGAL NAME]
TN Account No. / FEIN: [____________]
Tax Type(s): [Franchise & Excise / Sales & Use / Business Tax / Professional Privilege / Other]
Period(s): [MM/YYYY] – [MM/YYYY]
Notice of Proposed Assessment Date: [__/__/____]
NOPA Letter ID / Assessment No.: [____________]
Total Proposed Assessment: $[__________]

Body

Dear Hearing Officer:

Taxpayer hereby timely requests an informal conference with the Commissioner or the Commissioner's designee under Tenn. Code Ann. § 67-1-1438(b) regarding the above-referenced Notice of Proposed Assessment ("NOPA") dated [__/__/____].

1. Timeliness. The NOPA was issued on [__/__/____]. This written request is filed on [__/__/____], within the 30 calendar days required by Tenn. Code Ann. § 67-1-1438(b).

2. Authority. Tenn. Code Ann. § 67-1-1438(b) entitles Taxpayer to an informal conference and obligates the Department to set a time and place for the conference within 10 days of this request and to issue a written decision within 10 days after the conference concludes (subject to continuances as may be reasonably necessary).

3. Representative. [REPRESENTATIVE NAME, FIRM, ADDRESS, PHONE, EMAIL, BPR NO.] is authorized to represent Taxpayer in this matter. A duly executed Form REV-2602 (Tennessee Power of Attorney) is enclosed.

4. Disputed Items. A summary of disputed items is attached as Exhibit A:

5. Conference Format. Taxpayer requests a [telephone / video / in-person] conference at the Department's offices in Nashville at the earliest mutually convenient date. Taxpayer further requests a reasonable opportunity to submit a written brief and supporting exhibits (Part B) at least seven (7) days prior to the conference.

6. Continuance. Should the Department or Taxpayer require additional time to assemble information or documentation, Taxpayer requests that the Department exercise its discretion under Tenn. Code Ann. § 67-1-1438(b) to grant a reasonable continuance.

7. Reservation of Rights. Taxpayer reserves all rights to (a) bypass the informal conference and file suit directly in chancery court under Tenn. Code Ann. § 67-1-1801, (b) pay the final assessment and seek a refund under Tenn. Code Ann. § 67-1-1802, and (c) seek waiver of penalties under Tenn. Code Ann. § 67-1-1444.

Respectfully submitted,

________________________________
[NAME], [TITLE]
[For:] [TAXPAYER]

Enclosures: Form REV-2602; Copy of NOPA; Preliminary Issue Summary (Exhibit A).

Part B — Formal Protest / Conference Position Statement

I. Caption

STATE OF TENNESSEE
DEPARTMENT OF REVENUE
HEARING OFFICE — INFORMAL CONFERENCE

TAXPAYER'S POSITION STATEMENT AND REQUEST FOR REDETERMINATION
(Tenn. Code Ann. § 67-1-1438)

II. Identifying Information

1. Taxpayer: [Name]; [Address]; [Phone]; [Email].
2. Tax IDs: FEIN [____]; TN Account [____]; Sales Tax No. [____].
3. Tax Type / Period(s): [____].
4. Representative: [NAME, FIRM, ADDRESS, PHONE, EMAIL, TN BPR NO.]; Form REV-2602 attached as Exhibit 1.
5. NOPA: Dated [__/__/____]; Letter ID [______]; copy attached as Exhibit 2.
6. Amount in Dispute:

7. Uncontested Amount: Taxpayer [has remitted / will remit] $[____] to stop interest as to that portion (Exhibit 3).

III. Statement of Facts

1. Taxpayer is a [Tennessee / foreign] [entity type] with principal place of business at [____].
2. During the audit period, Taxpayer engaged in [____].
3. The Department audited Taxpayer's [tax type] returns for [periods], concluding on [__/__/____].
4. The Audit Division issued the NOPA on [__/__/____] reflecting adjustments of [SUMMARIZE].
5. Workpapers and IDR responses are attached as Exhibit 4.

IV. Issues and Argument

For each issue, Taxpayer (a) states the issue, (b) cites authority, and (c) describes documentary support.

☐ Issue 1 — Franchise & Excise Tax Computation. [E.g., the apportionment fraction was misapplied under Tenn. Code Ann. § 67-4-2012 because [____].]

• Authority: Tenn. Code Ann. §§ ____; Rule 1320-06-01-.____ ; Letter Rulings ____.
• Documents: Exhibits [__]–[__].

☐ Issue 2 — Sales & Use Tax Exemption. Transactions qualify for the [resale / industrial machinery / manufacturing / nonprofit] exemption under Tenn. Code Ann. § 67-6-____.

☐ Issue 3 — Nexus. Taxpayer lacked substantial nexus under Tenn. Code Ann. § 67-6-102 / § 67-4-2004 and Wayfair v. South Dakota, 585 U.S. 162 (2018), during [periods].

☐ Issue 4 — Business Tax Classification. The activities fall within Classification [__] (Tenn. Code Ann. § 67-4-708), not [__].

☐ Issue 5 — Statute of Limitations. Tenn. Code Ann. § 67-1-1429 bars portions of the assessment.

☐ Issue 6 — Waiver of Penalty. Penalties should be waived under Tenn. Code Ann. § 67-1-1444 for reasonable cause because [____].

☐ Issue 7 — Sampling / Projection. The audit sample is statistically invalid because [____].

☐ Issue 8 — Federal Adjustments. F&E adjustments derived from an unfinalized federal RAR.

V. Supporting Documentation

For each issue, Taxpayer relies on the documents identified in the exhibit list below and on testimony available at the conference from [WITNESS NAME, ROLE].

VI. Relief Requested

Taxpayer respectfully requests that the Commissioner:

(a) Adjust the proposed assessment by $[______] and issue a written determination accordingly under Tenn. Code Ann. § 67-1-1438(b);
(b) Waive penalties of $[______] for reasonable cause under Tenn. Code Ann. § 67-1-1444;
(c) Confirm any refund of contested amounts paid, plus interest under Tenn. Code Ann. § 67-1-1407; and
(d) Grant such other relief as is just.

VII. Verification

I declare under penalty of perjury under the laws of the State of Tennessee that the foregoing is true and correct to the best of my knowledge and belief.

Dated: [__/__/____]

________________________________
[NAME], [TITLE]
[For:] [TAXPAYER]

VIII. Exhibit List

Part C — Complaint Cover Letter — Chancery Court

Sender Letterhead

[LAW FIRM NAME]
[Street Address]
[City], Tennessee [ZIP]
Telephone: [(___) ___-____]
Email: [______________________]
TN BPR No.: [____________]

Date: [__/__/____]

VIA HAND DELIVERY / E-FILING (TN eFile)

Clerk and Master
Chancery Court for [Davidson County / [COUNTY]], Tennessee
[Court Address]

Re Block

Re: [TAXPAYER] v. David Gerregano, Commissioner of the Tennessee Department of Revenue
Complaint to Set Aside Assessment — Tenn. Code Ann. § 67-1-1801
Final Assessment Date: [__/__/____]
Amount in Controversy: $[__________]

Body

Dear Clerk and Master:

Enclosed for filing in the Chancery Court for [Davidson / [COUNTY]] County, Tennessee, are the following documents:

1. Verified Complaint to set aside the final assessment, brought under Tenn. Code Ann. § 67-1-1801(a)(1)(B), challenging the tax, penalty, and interest in the amount of $[______].
2. Summons for service on the Commissioner of Revenue at 500 Deaderick Street, Nashville, TN 37242, and on the Attorney General of Tennessee at P.O. Box 20207, Nashville, TN 37202.
3. Filing fee of $[______] / Cost Bond or Affidavit of Indigency (as applicable).
4. Civil Case Cover Sheet and Certification of Service.

Timeliness (Jurisdictional). The assessment became final on [__/__/____] (either upon issuance of the Department's written decision after informal conference under Tenn. Code Ann. § 67-1-1438 or, if no conference was requested, upon expiration of the 30-day NOPA period). This Complaint is filed on [__/__/____], within the 90 calendar days required by Tenn. Code Ann. § 67-1-1801(b)(1). The 90-day deadline is jurisdictional and strictly enforced. See Cherokee Fiber & Assocs., Inc. v. Gerregano, No. M2023-00748-COA-R3-CV (Tenn. Ct. App. June 13, 2024).

Venue. Venue is proper in this Court under Tenn. Code Ann. § 67-1-1801 because [Taxpayer resides in / Taxpayer principally conducts business in] [COUNTY] / Davidson County is an authorized venue for any taxpayer.

No pre-payment required. This action is brought under Tenn. Code Ann. § 67-1-1801(a)(1)(B) and does not require payment of the contested tax as a condition of suit. Interest will continue to accrue under Tenn. Code Ann. § 67-1-1407 during the pendency of this action.

Burden of proof. Taxpayer acknowledges the presumption of correctness attaching to the assessment, but the record evidence demonstrates that the contested assessment is incorrect for the reasons set forth in the Complaint.

Respectfully submitted,

________________________________
[ATTORNEY NAME], Esq.
TN BPR No. [__________]
Attorney for Plaintiff [TAXPAYER]

cc: Commissioner, Tennessee Department of Revenue
Office of the Tennessee Attorney General — Revenue Division

Part D — Pre-Filing Checklist

Calendaring

☐ Notice of Proposed Assessment (NOPA) date logged: [__/__/____]
☐ Day 15 milestone (POA executed; preliminary issues identified): [__/__/____]
☐ Day 25 milestone (draft conference request and position statement): [__/__/____]
☐ Day 30 informal conference request deadline (HARD): [__/__/____]
☐ Conference date scheduled by Department (within 10 days of request): [__/__/____]
☐ Written decision received from Hearing Office: [__/__/____]
☐ Final assessment date logged: [__/__/____]
☐ Day 90 chancery-court suit deadline (HARD; jurisdictional): [__/__/____]

Informal Conference Request — Tenn. Code Ann. § 67-1-1438(b)

☐ Written request filed within 30 days of NOPA
☐ Sent by certified mail (return receipt) and email
☐ Form REV-2602 (POA) enclosed
☐ Copy of NOPA attached
☐ Preliminary issue summary attached
☐ Conference format specified (telephone / video / in-person)
☐ Request for continuance reserved if needed

Substantive Review

☐ Audit workpapers and IDR responses analyzed
☐ Book-to-Tennessee-tax reconciliation completed
☐ F&E apportionment fraction reviewed (Tenn. Code Ann. § 67-4-2012)
☐ Sales/Use exemption certificates verified
☐ Nexus / Wayfair analysis completed (Tenn. Code Ann. § 67-6-102)
☐ Business tax classification confirmed (Tenn. Code Ann. § 67-4-708)
☐ Federal RAR / amended return status confirmed
☐ Statute of limitations confirmed (Tenn. Code Ann. § 67-1-1429)
☐ Penalty waiver basis identified (Tenn. Code Ann. § 67-1-1444)
☐ Voluntary disclosure / closing agreement options considered

Collection / Payment

☐ Uncontested amount paid (interest stops as to that portion)
☐ Decision on direct-contest suit (§ 67-1-1801) vs. pay-and-refund suit (§ 67-1-1802)
☐ Interest accrual monitored (Tenn. Code Ann. § 67-1-1407)
☐ Jeopardy assessment risk evaluated

Service / Filing

☐ Informal conference request filed within 30 days
☐ Position statement filed at least 7 days before conference
☐ Chancery Court complaint filed within 90 days of final assessment
☐ Service on Commissioner and Attorney General
☐ Filing fee or cost bond posted

Sources and References

• Tennessee Department of Revenue — Notices of Assessment (GEN-18): https://revenue.support.tn.gov/hc/en-us/articles/360057593431-GEN-18-Notices-of-Assessment
• Tenn. Code Ann. § 67-1-1438 (Informal conference): https://www.tn.gov/revenue/taxpayer-bill-of-rights.html
• Tenn. Code Ann. § 67-1-1801 (Suit to challenge final assessment): https://www.tn.gov/revenue/taxpayer-bill-of-rights.html
• Tenn. Code Ann. § 67-1-1802 (Refund actions)
• Tenn. Code Ann. § 67-1-1444 (Waiver of penalty)
• Tenn. Code Ann. § 67-1-1429 (Statute of limitations on assessment)
• Tennessee Department of Revenue — Hearing Office: https://www.tn.gov/revenue/about-the-department.html
• Form REV-2602 (Tennessee Power of Attorney): https://www.tn.gov/revenue/tax-resources/forms.html
• Cherokee Fiber & Assocs., Inc. v. Gerregano, No. M2023-00748-COA-R3-CV (Tenn. Ct. App. June 13, 2024): https://tncourts.gov/sites/default/files/OpinionsPDFVersion/Majority%20Opinion%20-%20M2023-00748-COA-R3-CV.pdf
• Tennessee Bar Association — Tax Section guidance: https://www.tba.org
• Davidson County Chancery Court: https://chanceryclerkandmaster.nashville.gov
• Tennessee Taxpayer Bill of Rights: https://www.tn.gov/revenue/taxpayer-bill-of-rights.html
• Informal Conference Decision Summaries (Tenn. Code Ann. § 67-1-1438(h)): https://www.tn.gov/revenue/tax-resources/letter-rulings.html