FTB Publication 4905
Offer in Compromise
For Individual Taxpayers
State of California
Franchise Tax Board
FTB 4905PIT C1 (REV 08-2006)
The Offer in Compromise program provides an alternative for individuals who are unable to pay their
outstanding California income tax liabilities, and who won’t be able to in the foreseeable future. This publication
will help you determine if you are a candidate for an Offer in Compromise. The answers to some critical
questions begin below and continue on the inside back cover.
What you should know before preparing an Offer in Compromise
Are You an OIC
If you are an individual who does not have the income, assets, or means to pay your tax
liability now or in the foreseeable future, you may be a candidate. The Offer in Compromise
program allows you to offer a lesser amount for payment of a non-disputed final tax
Generally, we approve an Offer in Compromise when the amount offered represents the
most we can expect to collect within a reasonable period of time.
Although each case is evaluated based on its own unique set of facts and circumstances,
we give the following factors strong consideration in the evaluation:
• Your ability to pay.
• Your equity in assets
• Your present and future income.
• Your present and future expenses.
• The potential for changed circumstances.
• The offer is in the best interest of the state.
We will only process your Offer in Compromise application if you have done all of the
• You have filed all of the required tax returns. If you have no filing requirement,
note it on the application.
• You have fully completed the Offer in Compromise application and provided all
• You agree with the Franchise Tax Board on the amount of tax you owe.
Will a Collateral
Upon approval, we may require you to enter into a collateral agre