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 percentage of FTB Offers in Compromise are accepted for individuals?
About 25%–27% based on the Franchise Tax Board’s reported statistics.
Whatβs the biggest mistake that leads to rejection?
Offering too little without properly supporting financial hardship.
How long does it take for the FTB to process an Offer?
Generally 6–12 months from submission to final decision.
Do I need to file all my returns before submitting an Offer?
Yes. Full filing compliance is mandatory before an Offer is considered.
ο»Ώπ£ 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.
π Learn more at www.orangecounty.cpa or call (657) 218-5700.
Marc The CPA's Tax Blog
