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 California Offer in Compromise.
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 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 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.
Let’s see if you qualify for the same type of outcome. We’ll review your case and show you what’s possible. Schedule your free consultation with a CPA today.
💡 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
🧭 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
- Restore peace of mind
📞 Call
657-218-5700
??
www.orangecounty.cpa
Frequently Asked Questions
Can anyone qualify for an Offer in Compromise like this?
No. You must show true financial hardship and submit full documentation. But if you qualify, the savings can be huge.
How long does it take for the FTB to accept an Offer?
Typically 6–12 months, depending on the case complexity and documentation.
Will the FTB stop garnishment while reviewing my Offer?
In many cases, yes. A levy release or hold can be requested as part of the submission.
📣 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.
Marc The CPA's Tax Blog
