IRS letter help
Got IRS Letter 525? What Proposed Audit Changes Mean and What to Do
Letter 525, the general 30-day letter, means a mail audit has ended with proposed changes to your return. You can agree, send more support, or ask for Appeals, but the response date on the letter controls all three.
Reviewed by LaToya Clark-Thompson, FounderLast updated
What this letter is
Letter 525 comes at the end of an examination by mail. It encloses Form 4549, the report of income tax examination changes, which lists each proposed adjustment and the examiner’s reason for it. An in-person audit ends with a similar letter, Letter 915.
It is not yet a final bill. It is the IRS’s proposal, and it gives you a defined window to accept it or dispute it before the next formal step.
Why you got it
After reviewing your return and whatever you sent in answer to the audit letter, usually Letter 566, the examiner concluded that changes are needed. Those changes can increase the tax, reduce a credit, or both. A common reason is that documents never arrived, or arrived without the item clearly tied to the line it was supposed to support.
What to do now
- Find the response date on the letter. It is generally 30 days from the letter date
- Read Form 4549 adjustment by adjustment. Note which ones you agree with and which you do not
- If you agree, sign and return the agreement form, and look at payment plan options if you cannot pay the balance
- If you disagree, send documents or an explanation for each disputed item by the response date
- If you need more time, call the number on the letter before the response date
- If you still disagree after the examiner reviews your reply, you can ask for a conference with the examiner’s manager, and then request an Appeals conference in writing before the date on the letter. Publications 3498 and 3498-A describe the process
What happens if you ignore it
The IRS may disallow the items and issue a notice of deficiency, Letter 3219 after a mail audit, which is closely related to the CP3219A. That notice gives you 90 days to petition the U.S. Tax Court, or 150 days if you live outside the United States. After that window, the IRS assesses the tax and the account moves into the regular balance letters, beginning with a CP14.
How we help
We compare each line of Form 4549 with the return and with the documents you have, and tell you plainly where the examiner looks right and where the records support a different answer. For the disputed items we organize the support and rebuild missing figures from bank and card statements. If any accepted change affects your South Carolina return, we prepare the amended state return as well; see amended tax returns.
Requesting a manager conference or Appeals, and speaking for you during them, is representation. That is the independent licensed CPA we work with, with our office coordinating. See IRS audit defense.
What to send us
- Every page of Letter 525 and Form 4549, through the secure client portal
- The original audit letter and everything you sent in response
- The return that was audited
- Any documents you did not send the first time
Frequently asked questions
Should I sign Form 4549 if I do not agree with everything?
Signing Form 4549 generally means you agree to the changes shown, and the IRS can assess them. If you disagree with some adjustments, do not sign it as is. Respond by the date on the letter explaining which items you dispute and why, with support. Partial agreements are possible but should be clearly worked out first.
What is the difference between Letter 525 and Letter 915?
Both deliver the results of an audit with proposed changes. Letter 525 is generally issued after an examination conducted by mail, and Letter 915 after an examination conducted in person, either at an IRS office or at your home or business. The response options are similar: agree, send more support, or request Appeals.
Can I still send documents after the audit closed with Letter 525?
Yes, that is one of the purposes of the letter. If you have records the examiner did not see, send them by the response date with a short explanation tying each document to the adjustment it addresses. The examiner can revise the report based on new information.
Does a federal audit change affect my South Carolina return?
Usually, yes. South Carolina starts from your federal adjusted gross income, so a federal change to income or deductions generally flows to the state return. If no amended state return is filed, the SCDOR may send a proposed assessment. We prepare the amended return once the federal result is settled.
Not the question you had? The full tax FAQ covers more ground, and our client reviews say what the work is actually like.
Related pages
Letter 566 (audit by mail)
Your return was selected for audit. Usually a mail audit of a few items, answered with documents.
Learn moreCP3219A notice of deficiency
The 90-day letter. A proposed change to your tax and a Tax Court deadline that cannot be extended.
Learn moreIRS penalty relief
The Automatic Exemption from Penalty, which replaces First-Time Abate, and reasonable cause relief.
Learn moreIRS payment plan options
The Simple Payment Plan, other installment agreements, short-term plans, hardship status and offers.
Learn morePart of IRS & SC Letter Help. Not sure which service fits? Answer a few questions.
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