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.
In this guide, we’ll break down Offers vs Installment Agreements, and how Orange County taxpayers can choose the smarter solution.
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 |
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.
π FTB Offer in Compromise Success Rates & Mistakes to Avoid
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
π What Happens If You Ignore FTB Notices
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’s the difference between an FTB Offer in Compromise and an installment agreement?
An Offer in Compromise (OIC) is a request to settle your tax debt for less than the full amount based on financial hardship. An installment agreement is a monthly payment plan to repay your full balance over time.
Which option is better if I can’t pay my California tax debt?
It depends on your financial situation. If you truly cannot pay, an OIC may result in a reduced settlement. If you can afford monthly payments, an installment agreement is often easier to qualify for and may avoid collection actions.
Can I apply for both an installment plan and an Offer in Compromise?
No. You can’t have both at the same time. However, if your OIC is denied, you may then negotiate an installment agreement. A CPA can help you decide which to pursue first.
Do both options stop wage garnishments and bank levies?
Yes. Both an approved Offer in Compromise and a valid installment agreement generally stop active collections—as long as you stay in compliance during the process.
Should I hire a CPA to decide between an OIC and installment plan?
Absolutely. A CPA can review your income, expenses, and asset profile to determine which program you qualify for—and which gives you the best long-term outcome with the least risk.
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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