Can You Negotiate Both IRS and FTB Debt at the Same Time
Introduction: Two Tax Agencies. One Problem.
Owing tax debt is overwhelming enough. But owing both the Internal Revenue Service (IRS) and the California Franchise Tax Board (FTB)?
That’s a different level of pressure.
If you're facing dual tax debt — from both federal and state agencies — you may be wondering:
“Can I handle both at the same time? Or do I need to deal with one before the other?”
The short answer:
β
Yes, you
can negotiate both — but it requires strategy, coordination, and precision.
In this guide, we break down how Orange County taxpayers can approach resolving IRS and FTB debt simultaneously, avoid levies, and move toward financial stability.
ο»Ώ
π Understanding the IRS and FTB: Two Different Beasts
| Feature | IRS | FTB |
|---|---|---|
| Jurisdiction | Federal | State of California |
| Debt Types | Income, payroll, penalties | CA income, business entity taxes |
| Collection Style | Formal, slower | Fast, automated, aggressive |
| Programs | OIC, Installment, CNC | OIC, Installment, Hardship Deferral |
| Notices | Multiple, detailed | Few, fast-moving |
| Lien Threshold | $10,000+ | $100+ |
π IRS Tax Relief vs FTB Relief – Key Differences
βοΈ Why Many Taxpayers Owe Both
It’s more common than you think, especially for:
- Self-employed professionals
- Small business owners
- Real estate investors
- Gig economy workers
- Anyone who moved between states
Filing errors, underpayment of estimated taxes, and missed deadlines often result in simultaneous balances to both agencies.
π₯ What Can Happen If You Ignore One While Negotiating the Other?
Let’s say you focus on resolving your IRS debt but ignore the FTB:
- The FTB may garnish your wages
- File a lien against your home or business
- Levy your bank account — even if the IRS just paused collections
Or vice versa: The IRS could start enforcement while you’re in talks with the state.
π What Happens If You Ignore FTB Notices?
β Can You Negotiate Both at the Same Time? Yes — Here’s How
The key is to:
- Treat them as two separate negotiations
- Prioritize based on enforcement risk and financial exposure
- Build a unified financial disclosure package
- Use a CPA or resolution specialist who understands both systems
π§ Step-by-Step Strategy to Handle IRS and FTB Debt Together
β 1. Get Transcripts from Both Agencies
- IRS Wage & Income + Account Transcripts
- FTB Account Transcript + Notices
You need a full picture of what each agency thinks you owe.
β 2. Prepare a Master Financial Disclosure
You’ll need:
- Full income documentation
- Living expenses
- Asset values (home, vehicles, bank, crypto)
- Debt and liabilities
π‘ Use one clean format to submit to both agencies.
π How the FTB Evaluates Your Ability to Pay
β 3. Prioritize the Most Aggressive Creditor
In many cases, that’s the FTB, which:
- Files liens faster
- Garnishes wages with less notice
- Levies accounts with minimal delay
If the IRS is in “quiet mode” (e.g. paused enforcement or no recent notices), it may be better to handle FTB first.
β 4. Submit Relief Applications Separately but Strategically
- IRS: Offer in Compromise or Installment Agreement
- FTB: Offer in Compromise, Installment Agreement, or Hardship Deferral
Each application is submitted separately — but your strategy must be unified.
π FTB Offer in Compromise vs Installment Agreement – Which Is Better?
β 5. Prevent Cross-Sabotage
Example:
- You propose an IRS Offer based on financial hardship, but the FTB is garnishing your paycheck — this ruins your cash flow analysis.
- Or you get into an IRS Installment Agreement, but now you can’t afford FTB payments.
Your CPA should coordinate timing to pause enforcement long enough to file both resolutions.
π§Ύ Can You Get Both IRS and FTB Offers in Compromise Accepted?
Yes — but it’s difficult.
Success depends on:
- Full compliance with both agencies
- Accurate, credible financials
- Demonstrated hardship
- Realistic offers that reflect your ability to pay
π FTB Offer in Compromise Success Rates & Mistakes to Avoid
π What If You Settle One but Not the Other?
That’s common — and still a win.
For example:
- You settle your FTB debt for $6,000
- But your IRS debt remains at $30,000
- You then enroll in a long-term payment plan with the IRS
This staggered approach still provides significant relief and prevents aggressive collections.
π§ How Boulanger CPA Helps Orange County Taxpayers with Dual Debt
We work with clients across Irvine, Santa Ana, Anaheim, Fullerton, and surrounding areas to:
- Analyze and map IRS + FTB debt
- Prioritize risk and exposure
- Prepare parallel settlement or payment plans
- Negotiate with both agencies simultaneously
- Stop levies and garnishments from either source
π Call
657-218-5700
π
www.orangecounty.cpa
Frequently Asked Questions
Can I negotiate one agreement to cover both IRS and FTB debt?
No. These are separate agencies. Each debt requires its own negotiation.
Should I resolve IRS or FTB debt first?
It depends. The FTB is usually more aggressive, so we often start there — but it varies by case.
Can I apply for an Offer in Compromise with both at the same time?
Yes — but both require separate applications and detailed financial documentation.
Can both agencies garnish my wages at the same time?
Yes. This is why coordinated resolution is essential.
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.
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