Case Study How We Settled $92,000 in FTB Debt for $6,500

Yes, You Can Settle California Tax Debt — Here’s Proof

Can you really settle with the California Franchise Tax Board (FTB)?

Here’s proof: one of our clients owed $92,000+ to the FTB — and we settled the case for just $6,500 through a IRS offer in compromise settlement strategy applied at the state level.

This case study walks through exactly how we did it: from the client’s financials, to how we prepared the offer, to why the state agreed. If you’re facing serious FTB debt and wondering what’s actually possible, read on — and then schedule a call to find out what strategy would work in your case.

Note: Names, locations, and details have been changed for privacy.

Client Background (Anonymized)

• Client Name: "David" (an Orange County-based sales consultant)
• Age: 54
• Location: Anaheim, California
• Occupation: Independent contractor (1099 income)
• Debt Type: FTB personal income tax debt from 2012–2019
• Total Amount Owed: $92,173 (tax + penalties + interest)

What Caused the Debt?

David had gone through a difficult 8-year stretch:

• Inconsistent income as a self-employed salesperson
• Missed multiple tax filings
• IRS and FTB Substitute Returns assessed at inflated amounts
• Penalties and interest compounded year after year

By the time he contacted our office, David had:

• $92,000 in total FTB debt
• Several missing tax returns
• Ongoing FTB bank levy enforcement through wage garnishment at a rate of $900 per paycheck

Step 1: Filing Compliance & Transcript Review

The first step was pulling all available IRS and FTB transcripts to:

• Reconstruct missing returns
• Reverse substitute assessments
• Establish reasonable basis for income and expense claims

We filed corrected returns for 4 years and adjusted 2 others, reducing his real liability to about $60,000.

Step 2: Financial Disclosure & Hardship Evaluation

Next, we evaluated David’s financial picture:

• Monthly income: $3,800 average gross
• Expenses: $3,600 documented (housing, food, medical)
• Assets:
• Checking account: $212
• No retirement savings
• 14-year-old vehicle with no equity
• Renting a small apartment

He had no disposable income, no equity, and was not able to work full-time due to health complications.

Step 3: Submitting the Offer in Compromise

We prepared a comprehensive Offer in Compromise package including:

• FTB Form 4905P
• Full financial disclosure
• Supporting hardship documentation
• Proposed settlement amount: $6,500 lump sum
• Included explanation of inability to pay over time due to health status and age

We also noted that while some taxpayers explore California installment agreement options, David did not qualify because his financial hardship left him with no ability to make monthly payments.

We requested temporary levy relief while the offer was under review.

Step 4: The Review Process

The review took 9 months.

During this time:

• The FTB requested 2 rounds of updated financial documentation
• Our office fielded all communication on David’s behalf
• David stayed current on all filings and made no new debt

The Outcome: Offer Accepted for $6,500

In July of that year, the FTB sent a Notice of Offer Acceptance:

• Original Balance: $92,173
• Accepted Offer: $6,500
• Levy Released
• Lien marked for withdrawal after payment was completed

David paid the lump sum within 30 days and is now fully compliant, debt-free, and planning to buy a home within the next year.

💡 Key Takeaways

• FTB does settle — but only for those who qualify
• You must be current with filings and show true inability to pay
• Supporting documentation is everything
• Working with a CPA gives you strategic and procedural leverage
• If you’ve ever wondered why the IRS rejected your Offer in Compromise, the same logic applies to California: eligibility, documentation, and financial reality are what matter most.

🧭 How Boulanger CPA Helps Orange County Taxpayers

We help individuals and small business owners across Anaheim,  Santa Ana,  Irvine, and  Fullerton:

• File missing returns
• Reverse substitute assessments
• Prepare successful Offers in Compromise
• Stop wage garnishments and handling payroll tax enforcement from EDD
• Provide guidance if you’re searching for IRS tax relief near you
• Restore peace of mind

When tax debt feels overwhelming, it’s important to know you’re not out of options. With the right strategy, you can get relief — and if you want to explore more in Defend What’s Yours, we’re here to guide you.

📞 Call 657-218-5700
?? www.orangecounty.cpa

📣 About the Author

Marc Boulanger, CPA is the founder of Boulanger CPA and Consulting PC, a boutique tax resolution firm based in Orange County, California and trusted by high-income individuals and business owners across Southern California.

He is the author of Defend What’s Yours: A California Taxpayer’s Guide to Beating the IRS and FTB at Their Own Game, available now on Amazon. The book offers a step-by-step plan for resolving IRS and FTB tax debt without losing your business, your home, or your peace of mind.

With over a decade of experience resolving high-stakes IRS and State tax matters, Marc brings strategic insight to complex cases involving wage garnishments, bank levies, unfiled returns, and six-figure tax debts. He is known for helping clients reduce or eliminate tax liabilities through expertly negotiated settlements and compliance plans.

Marc is a Certified Public Accountant licensed in California and Oklahoma and holds the designation of Certified Tax Representation Consultant. He is a member of the American Society of Tax Problem Solvers (ASTPS) — the national organization founded by the educators and practitioners who have trained thousands of CPAs, EAs, and tax attorneys in IRS representation strategy.

Every case is handled with discretion, proven methodology, and direct CPA-led representation — not call center scripts.

📍 Learn more at www.orangecounty.cpa or call (657) 218-5700.