Can You File an Offer in Compromise If You Owe the IRS and FTB?
If you’re a California taxpayer who owes both the IRS and the Franchise Tax Board (FTB), you may be wondering:
Can I file just one Offer in Compromise to settle both?
Unfortunately, the answer is no — but that doesn’t mean you’re stuck.
Each agency has its own Offer in Compromise (OIC) program. If you owe both, you’ll need to prepare and file two separate Offers — one with the IRS and one with the FTB.
The good news? If you qualify, you may be able to:
- Settle both debts for less than what you owe
- Stop levies and garnishments from both agencies
- Get a fresh start with one coordinated strategy
This guide explains:
- How the IRS and FTB OIC programs work
- Whether you qualify for both
- The documents required for each
- Common mistakes to avoid
- When to file separately vs together
Why You Need Two Offers
| IRS OIC | FTB OIC |
|---|---|
| Federal program | State-level program (California) |
| Covers IRS taxes only | Covers California income or business taxes only |
| Use Form 656 and Form 433-A/B | Use FTB’s specific OIC forms |
| Submit to IRS in Tennessee | Submit to FTB in Sacramento |
| Payment options: lump sum or periodic | Payment options: lump sum only (usually) |
Each program has separate forms, criteria, and procedures. Filing one has no impact on the other.
Who Qualifies for IRS and FTB OICs?
To qualify for both:
- You must have no realistic way to pay the full balance
- You must be compliant with all tax filings
- You must submit full financial disclosure
- You must not be in an active bankruptcy proceeding
For the FTB: Offers are usually only accepted if:
- The taxpayer is
not operating a business, and
- They show true financial hardship or insolvency
What Documents Do You Need for Each Offer?
IRS OIC
- Form 656 (Offer in Compromise)
- Form 433-A (individuals) or 433-B (businesses)
- Last 3 months of pay stubs
- Last 3–6 months of bank statements
- Mortgage or rent documents
- Utility, vehicle, and insurance bills
- IRS transcripts
FTB OIC
- FTB OIC Form (individual or business version)
- FTB financial statement worksheets
- Federal tax returns
- Explanation of hardship or inability to pay
- Supporting evidence of insolvency (e.g., disability, unemployment)
Should You File Both Offers at the Same Time?
It depends. In most cases, yes — because both agencies may be actively collecting.
Pros of filing both:
- Stops IRS and FTB levies
- Resolves all tax debt simultaneously
- Creates a clean financial slate
But if one debt is much larger or more urgent, start there and follow with the other within 30–60 days.
Mistakes to Avoid When Filing Both Offers
- Submitting IRS forms to the FTB or vice versa
- Leaving out FTB debt on the IRS offer (and vice versa)
- Using inflated expenses that won’t be accepted
- Failing to include all required attachments
- Not disclosing other agency debts (they
can find them)
Why You Need Help With Dual Offers
If you’re dealing with both IRS and FTB collections, your financial situation is under a microscope. An experienced tax professional will:
- Build one unified financial story
- Prepare compliant OIC packages for both agencies
- Defend your budget, hardship claims, and valuations
- Keep collection actions paused while your offers are reviewed
At Boulanger CPA, we help California taxpayers resolve dual-agency debt permanently.
📞 Call 657-218-5700 or Schedule a Consultation
Frequently Asked Questions
Can I settle both IRS and FTB debt with one Offer in Compromise?
No. You must file separate Offers in Compromise with the IRS and the California FTB.
Can I file both Offers at the same time?
Yes. Filing both together is often the best strategy to stop dual collections and resolve your tax debt completely.
Do the IRS and FTB work together on Offers?
No. Each agency handles its own offer independently and uses different forms, rules, and financial analysis.
What if I only qualify for one Offer?
You may still be able to negotiate a payment plan or hardship status with the other agency while settling the larger debt first.
Can I submit Offers while being levied or garnished?
Yes. Submitting a valid Offer will usually pause collections — but only if done properly and with supporting documents.
📣 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.
📍 Learn more at www.orangecounty.cpa or call (657) 218-5700.
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