FTB Offer in Compromise vs Installment Agreement – Which Is Better?
Introduction: You Have Options — But Choosing the Wrong One Could Cost You
When you owe the California Franchise Tax Board (FTB), two major tax resolution options stand out:
- Offer in Compromise (OIC): Try to settle for less
- Installment Agreement: Pay the full balance over time
Both strategies can help you avoid liens, levies, and garnishments — but picking the wrong one could mean paying thousands more in taxes, penalties, and interest.
This guide will compare FTB Offers in Compromise and Installment Agreements so Orange County taxpayers can make a smarter choice.
π Quick Comparison: Offer vs Installment Plan
| Feature | Offer In Compromise | Installment Agreement |
|---|---|---|
| Goal | Settle debt for less | Pay full balance |
| Eligibility | Must prove inability to pay | Must afford monthly payments |
| Pros | Potential major reduction | Quick approval, easy setup |
| Cons | Hard to qualify, slow process | Full debt remains + interest accrues |
| Processing Time | 6–12 months | Immediate to 30 days |
This is where you’ll want to see how the FTB determines eligibility for an OIC, including income, assets, expenses, and future earning potential.
π§ What Is an FTB Offer in Compromise?
An Offer in Compromise is a legal agreement allowing a taxpayer to settle their FTB tax debt for less than the full amount owed, only if they can prove:
- They cannot pay the full balance now or in the future
- Their offer represents the most the FTB can reasonably collect
β
Potential to eliminate
50–90% of the balance
β
Full financial disclosure required
π How the FTB Evaluates Your Ability to Pay
π§ What Is an FTB Installment Agreement?
An Installment Agreement allows you to pay off your full FTB tax balance in manageable monthly payments, typically over up to 60 months.
β
Stops collection actions immediately
β
Simpler approval process than Offers
β Pay full tax, penalties, and interest
π When an Offer in Compromise Makes More Sense
β 1. You Truly Can’t Afford to Pay
If you have minimal income, no major assets, and can't pay even over 5 years, an Offer may be smarter.
β 2. You Have Serious Hardship
Medical issues, caregiving for a dependent, or permanent job loss strengthen an Offer case.
β 3. You’re Willing to Wait
Offers take 6–12 months for review — if you can't risk that time, a payment plan may be better.
We’ll also explain how to avoid common errors that lead to denial during the application process.
π When an Installment Agreement Makes More Sense
β 1. You Can Afford Monthly Payments
If you have stable income and can reasonably pay off the balance, a payment plan avoids the hassle of Offer review.
β 2. You Need Immediate Relief
Installments can be set up within days, quickly stopping FTB collection actions.
β 3. You Want Less Invasive Financial Review
Installment Agreements require basic financial disclosure, but less intense than Offers.
π FTB Collections Process: A Guide for California Taxpayers
βοΈ Pros and Cons of Each Option
π₯ Offer in Compromise Pros
- Settle for pennies on the dollar (sometimes)
- Full final settlement
- Stops future interest and penalties
π₯ Offer in Compromise Cons
- Long processing time
- Requires complete financial transparency
- Difficult to qualify
π₯ Installment Agreement Pros
- Fast and easy approval (especially for small balances)
- Stops collections quickly
- No need for deep hardship proof
π₯ Installment Agreement Cons
- Pay the full balance + growing interest
- Debt remains active until fully paid
- Risk of default if income changes
π What Happens If You Default?
- Installment Agreement: Collections resume (levy, garnishment, lien)
- Offer in Compromise: Offer can be revoked for 5 years if you miss filings or payments
Knowing the steps before and after these programs can help you stay compliant and avoid default.
π§ How Boulanger CPA Helps Orange County Taxpayers
We help taxpayers in Anaheim, Irvine, Santa Ana, Fullerton, and across Orange County:
- Evaluate whether settlement or payment is smarter
- Build successful Offer in Compromise submissions
- Set up affordable Installment Agreements
- Negotiate with the FTB on your behalf
π Call
657-218-5700
π
www.orangecounty.cpa
Frequently Asked Questions
What is an FTB Offer in Compromise?
An Offer in Compromise allows eligible taxpayers to settle their California Franchise Tax Board debt for less than the full amount owed.
What is an FTB Installment Agreement?
An Installment Agreement is a payment plan that allows you to pay your tax debt in monthly installments over time.
Which option saves more money?
An Offer in Compromise can potentially save you more if you qualify, but approval rates are low and require strong financial documentation.
Which option is easier to qualify for?
An Installment Agreement is generally easier to obtain, but you will still pay the full balance plus interest and penalties over time.
Can I switch from an Installment Agreement to an Offer in Compromise?
Yes, but you must meet strict OIC eligibility requirements, and the FTB will reassess your financial situation before approval.
How can a CPA help choose the right option?
A CPA can evaluate your finances, explain each program’s pros and cons, and negotiate directly with the FTB for the best possible outcome.
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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