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Tax Debt Help in California: IRS Options and Free Clinics

By the Tax Relief Answers editors · Sources checked November 3, 2026 · How we check

The short answer

Californians can owe two separate agencies: the IRS for federal tax and the Franchise Tax Board (FTB) for state income tax, and each one runs its own payment plans and settlement program. The FTB's individual payment plan covers balances up to $25,000 paid within 60 months and costs $34 to set up, while the IRS allows online plans up to $50,000. A plan with one agency does not cover the other.

Federal vs state: who to contact for what

Payment plans: IRS vs FTB

IRS figures are from the IRS payment plans page as of October 2026; see our IRS payment plan page. FTB figures are from the FTB payment plans page, last updated April 7, 2026.

You cannot apply online if you already have an FTB installment agreement, a wage garnishment, a bank levy or another collection order; call instead. The FTB may ask for a financial statement, and a tax lien may be a condition of the plan. Processing can take up to 90 days; the FTB says to keep paying meanwhile to avoid more interest and penalties. Businesses have a separate FTB plan: up to $25,000, paid within 12 months, with a $50 setup fee.

FTB Offer in Compromise

The FTB's Offer in Compromise page lets you offer a lesser amount on a tax debt you do not dispute. You must first have explored a payment plan, filed all required returns and agreed with the amount owed. The FTB weighs your ability to pay, assets, income and expenses.

What the FTB page states about its own offers:

• The offer must be a lump sum, with no payment plan; the IRS offer allows a lump sum paid in up to 5 payments.
• The offer cannot include prior payments and cannot be zero.
• The FTB evaluates its offer separately from any offer to the IRS or other California agencies.
• Collection does not stop automatically, though in most cases no new collection starts during review; penalties and interest keep accruing.
• If approved, collection stops and state tax liens are released.

You can apply through a MyFTB account or on paper with Form 4905PIT for individuals. The FTB says to expect an acknowledgment in 2 to 4 weeks and, generally, a decision 4 to 6 months after a specialist is assigned. The FTB page does not list an application fee; confirm any cost with the FTB before you apply.

Free Low Income Taxpayer Clinics in California

Low Income Taxpayer Clinics (LITCs) are independent organizations that receive IRS grants and represent people with the IRS for free or a small fee. They generally serve people with income at or below 250% of the federal poverty guidelines (2026: $39,900 for one person) and amounts in dispute usually under $50,000, per the Taxpayer Advocate Service LITC page. IRS Publication 4134, Rev. 1-2026, lists these California clinics:

Pub 4134 also lists three Taxpayer Education Clinics, for people learning English: Chinatown Service Center and Haven Services (Los Angeles) and United Way of Merced County (Merced).

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