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

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

One of the most common questions we get is:

“Will the FTB actually settle my debt for less than I owe?”

The answer is yes — but only if you qualify and build the right case.

This case study details how our team at Boulanger CPA helped a real client settle a $92,000 California Franchise Tax Board (FTB) liability for just $6,500. While every case is different, this story shows what’s possible when you take the right approach.

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.

💡 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

📣 About the Author

Marc Boulanger, CPA is the founder of Boulanger CPA and Consulting PC, based in Orange County, California.

With over a decade of experience helping individuals and businesses resolve serious IRS and State tax issues, Marc specializes in tax resolution strategies including Offers in Compromise, wage garnishment relief, and back tax compliance.

He is licensed as a Certified Public Accountant in both California and Oklahoma, and has a proven track record of helping clients settle complex tax debts and regain financial stability.

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