FTB Offer in Compromise Success Rates & Mistakes to Avoid
Introduction: Settling Your California Tax Debt Is Possible — But Not Easy
The California Franchise Tax Board (FTB) offers a powerful tool for taxpayers who cannot afford to pay their full tax debt: the Offer in Compromise (OIC).
But here’s the reality: FTB Offers in Compromise for individuals are difficult to get approved.
Understanding your true chances — and what mistakes to avoid — is crucial if you want to succeed.
In this guide, we’ll break down the actual success rates for personal Offers, the top reasons Offers are denied, and how Orange County taxpayers can submit a winning application.
π What Is the FTB Offer in Compromise Success Rate for Individuals?
According to the Franchise Tax Board's official annual reports, approximately 25%–27% of personal (individual income tax) Offers in Compromise are accepted.
That means about 1 in 4 Offers from individual taxpayers are successful.
β With strong preparation and professional support, approval odds can be significantly improved — but the FTB applies strict financial review standards.
π§ How the FTB Reviews an Offer in Compromise
π How the FTB Evaluates Your Ability to Pay
The FTB considers:
- Your current assets (cash, equity, retirement accounts)
- Your future earning potential (especially over the next 5 years)
- Your necessary living expenses
- Whether you're compliant with filing and payment obligations
If they believe they can collect more through traditional enforcement, your Offer will be denied.
π« Top 10 Mistakes That Cause FTB Offer Denials
β 1. Offering Too Little
Submitting a very low offer without strong documentation is an instant red flag.
β 2. Incomplete Financial Documentation
Missing paystubs, bank records, or mortgage statements often causes Offers to be rejected.
β 3. Inflating Living Expenses
Claiming excessive household expenses — beyond FTB guidelines — damages credibility.
β 4. Failing to Disclose Assets
If you omit assets (bank accounts, crypto, investments), your Offer will be rejected — and may trigger further penalties.
β 5. Unfiled Tax Returns
Offers are immediately rejected if the taxpayer has any unfiled returns.
π How to Get Back Into Compliance with the FTB (Non-Filers Guide)
β 6. Ignoring Future Income
The FTB projects income over 5 years. Ignoring future earnings will undermine your Offer.
β 7. Weak Hardship Narrative
If you have medical hardships, family caregiving responsibilities, or permanent earning impairments, you must document them thoroughly.
β 8. Prior Compliance Issues (Broken Payment Plans)
If you’ve defaulted on previous agreements, it must be addressed head-on.
β 9. DIY Offers Without Professional Help
Most self-filed Offers lack the detail and strategy needed for approval.
β 10. Continuing to Miss New Tax Obligations
If you're missing estimated payments during the review period, the Offer will be rejected.
π Top Tax Relief Options for California Taxpayers
π How to Improve Your Chances of FTB Offer Approval
β Work with a Tax Resolution CPA
An experienced CPA ensures:
- Full financial compliance
- Strategic offer structuring
- Strong hardship documentation
β Offer Realistic Settlement Amounts
Your Offer must reflect what the FTB could reasonably collect through enforcement.
β Stay 100% Current
All tax filings and current estimated tax payments must be on file and up to date.
β Be Thorough and Transparent
No hidden assets, no omitted income.
π How Boulanger CPA Helps Orange County Taxpayers
We help clients across Irvine, Santa Ana, Anaheim, Fullerton, and throughout Orange County:
- Analyze ability to pay accurately
- Prepare complete, defensible Offers
- Negotiate directly with the FTB
- Respond to FTB counteroffers
- Prevent unnecessary rejections
π
Call 657-218-5700
π
www.orangecounty.cpa
Frequently Asked Questions
What is the success rate for FTB Offers in Compromise?
FTB Offer in Compromise (OIC) success rates are significantly lower than IRS OICs. Most accepted FTB offers involve closed businesses or extreme financial hardship. Approval often depends on clean documentation and a well-supported request.
Why are so many FTB OICs denied?
Common reasons for denial include failure to include supporting documents, unrealistic offer amounts, incomplete forms, ongoing business operations, or evidence of collectibility such as home equity or unreported income.
Can I reapply if my OIC was denied?
Yes. You can submit a new Offer in Compromise if your financial situation has changed or you can correct issues that led to the initial rejection. A CPA can help reassess your eligibility and improve your next submission.
What’s the biggest mistake people make when applying?
The most common mistake is submitting an offer without a clear hardship narrative or documentation. Others include undervaluing assets, overestimating expenses, or applying while still noncompliant with other filings.
Should I hire a CPA to submit an FTB OIC?
Yes. A CPA can calculate a realistic offer, gather and present the correct documents, and communicate directly with the FTB. Representation improves your odds and helps avoid mistakes that cause unnecessary denials.
ο»Ώπ£ 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.
π Learn more at www.orangecounty.cpa or call (657) 218-5700.
Marc The CPA's Tax Blog
