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
increase your chance of approval for an FTB Offer in Compromise.
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 to understand how the FTB calculates settlement amounts.
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 you’re weighing different options, make sure to compare the two settlement programs before applying so you don’t waste time on the wrong approach.
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.
If this happens, you need to see what happens if your OIC is denied so you can respond strategically.
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
A professional can ensure compliance, structure your offer strategically, and ο»Ώreduce penalties alongside your settlement application.
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?
While the FTB does not publish exact figures, OIC approval rates are generally low—often under 25%—without strong supporting documentation.
What’s the biggest mistake in applying for an FTB OIC?
The most common mistake is underreporting assets or income, which can lead to automatic denial or fraud allegations.
How can I improve my chance of OIC approval?
Provide complete financial disclosures, ensure accuracy in all documents, and work with a CPA who understands FTB standards.
Does the FTB negotiate like the IRS?
No. The FTB is typically more strict and uses its own evaluation methods, which can result in higher settlement offers than expected.
Can I reapply if my OIC is denied?
Yes, but you should address the reasons for denial and provide new evidence or updated financials to improve your case.
Why should I hire a CPA for an FTB OIC?
A CPA can help you present your financials strategically, avoid mistakes, and negotiate for the lowest possible settlement.
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.
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