The 4-Step Method I Use to Resolve Any IRS Problem

Nobody wants an IRS envelope in their mailbox. When people open one, they almost always do the same thing: they read the letter, panic, and respond to exactly what’s on that page. That’s usually a mistake.

An IRS letter is usually just a single snapshot of a much bigger file the IRS has on you.

I know because I used to work inside the IRS as a Revenue Agent, auditing small businesses and individuals. I’m also a CPA, and today I’m a tax attorney at Boss Tax Law in Charlotte, North Carolina, sitting on the other side of the table and helping people get out of IRS trouble.

Below is the four-step method I use to resolve any IRS problem. It’s called the BOSS Method, and by the end of this post you’ll know exactly what to do when the next IRS letter shows up.

Where the BOSS Method Comes From

The idea didn’t come from tax law. It came from a fighter pilot named John Boyd. Other pilots called him “40-Second Boyd.” His standing bet was that he could start a dogfight in a losing position and beat any pilot in under 40 seconds, and he almost never lost.

Boyd didn’t have a faster plane. He made decisions faster, using a four-step loop: Observe, Orient, Decide, Act, known as the OODA loop.

Boyd said the most important step was Orient: figuring out where you really are before you do anything. That’s where most people go wrong with the IRS. They skip straight to Act, calling the number on the letter or mailing something back before they understand where their case actually stands.

So I adapted Boyd’s loop for tax problems:

• Baseline
• Orient
• Strategize
• Secure

Meet Tardy Tom

To make this concrete, let’s follow a hypothetical taxpayer named Tardy Tom. Tom runs a small business, and he just received a CP504 from the IRS. He’s freaking out, like a lot of people do. Let’s walk him through the four steps.

Step 1: Baseline — Find Out What’s Actually True

Before you do anything, you need to know what’s actually true on your IRS account. That means what the IRS’s own internal records say, not what the letter says. Those records are called transcripts.

You can get them for free through your online account at IRS.gov. If you’re pulling records for a business, you may need to call the IRS or submit a form. A tax professional can also pull them for you if you sign an authorization form.

The 3 Transcripts You Need

1. Account Transcript: The IRS’s ledger for each year, showing what you owe, what’s been paid, what penalties were added, and what the IRS has done on your file.
2. Wage and Income Transcript: Every W-2, 1099, and other form reported under your Social Security number. It’s often exactly what triggered the letter.
3. Tax Return Transcript: What you actually filed with the IRS.

The 3 Questions to Answer

Put the transcripts side by side and ask:

• What do I really owe, and for which years?
• Are any returns missing?
• What is the IRS already doing on my account?

When the Letter and Transcript Disagree

Letters and transcripts don’t always match. A letter can be out of date by the time it reaches you, and payments sometimes post late, get applied to the wrong year, or never get received. When they disagree, the transcript is usually the better picture of reality.

Tom’s Baseline

Tom’s CP504 is about the balance he owes for 2022. But when we pull his transcripts, we find two more things:

• His 2023 return was never filed.
• There’s a large failure-to-file (late filing) penalty on 2022.

If Tom had simply responded to the collection notice, he likely would have missed both. And here’s the rule: the IRS generally won’t agree to a payment plan or settlement while returns are missing. So Tom’s first move is getting his 2023 return filed.

Step 2: Orient — Figure Out Where Your Case Sits

This is the step Boyd said matters most.

The IRS’s own Taxpayer Advocate Service published a map of how the tax system works. It looks like a subway map, but one designed by someone who wants to make the trip difficult.

The good news is that almost every IRS problem sits in one of four places:

• Processing: The IRS is checking your return or matching it against what employers and banks reported.
• Exam: An audit.
• Appeals and Court: Where you dispute what the IRS says you owe or may owe.
• Collections: The amount is settled, and the IRS wants to get paid.

The Most Important Question

Is the amount you owe still up for debate, or is it essentially locked in? There are exceptions, but if it’s still being decided, your job is to get the number right. If it’s already been assessed, your job is to figure out how to get it paid or reduced. Those are completely different games.

Watch the Clock

IRS deadlines open and close doors. A few of the big ones:

• 30-day letter: An audit report usually comes with one. It’s your window to go straight to Appeals.
• Notice of Deficiency: 90 days to petition Tax Court before you pay a penny.
• Final Notice of Intent to Levy: 30 days to request a Collection Due Process hearing.
• Collection statute: The IRS generally has 10 years from the date a tax is assessed to collect it.

Miss one of these, and you lose options. Use them, and you keep your leverage, which often leads to a great outcome.

Predict the IRS’s Next Move

Boyd also taught that if you know your opponent’s next move, you can act before they make it. The IRS is slow but very predictable, especially in collections, because the letters come in a set order.

Where is Tom? He’s in Collections. His 2022 balance is assessed, so we’re not arguing about the tax itself. And because he has a CP504, the Final Notice of Intent to Levy is probably next. That gives him a short window to file, get organized, and pick a plan while every option is still open.

Step 3: Strategize — Pick the Right Bucket

Once you know what’s true and where you are, you can pick a path. There are dozens of IRS programs and relief options, but they essentially all fit into four buckets.

Order Matters: Fight the Number Before You Negotiate the Payment

Doing these things in the right order is extremely important. You usually want to fight the number before you negotiate the payment. If you set up a payment plan first, you might spend years paying penalties you never should have owed.

Tom’s Plan

Tom’s plan is three separate moves, made in this order:

1. File his 2023 return. Nothing else works until he’s compliant.
2. Request first-time abatement on the 2022 failure-to-file penalty, which is available if his prior history is clean.
3. Set up an installment agreement on whatever balance is left.

Step 4: Secure — Execute, Document, and Verify

The final step is where you carry out the plan, and it’s where a lot of people drop the ball.

The Part Almost Nobody Does

After the IRS agrees to something, go back and pull your transcripts again. I’ve seen penalty abatements that were approved but never entered into the system, and payment plans accepted over the phone that were never actually set up.

If it’s not on the IRS transcript, then as far as the IRS’s computers are concerned, it didn’t happen, and the collection letters often keep coming.

That’s why BOSS is a loop, not a checklist. Secure takes you right back to Baseline. You check the records, confirm everything posted the way it should, and only then call it done.

For Tom, that means pulling his account transcript a few weeks after his installment agreement is set up. He confirms the penalty came off, the agreement is showing, and the collection notices have stopped. Now he’s done. He just has to keep making his payments.

The BOSS Method Recap

• B — Baseline: Pull your transcripts and figure out what’s actually true.
• O — Orient: Figure out where your case sits and which deadlines control it.
• S — Strategize: Pick the right bucket, and fight the number before you negotiate the payment.
• S — Secure: Execute, document, and verify it on the transcript.

The next time an IRS letter shows up, don’t just answer the letter. Answer the case.