IRS Letter 525: general 30-day letter (proposed audit changes)

Letter 525 comes with an examination report (often Form 4549) showing proposed adjustments, additional tax and any penalties. It means the examiner has reached a proposed conclusion. You can agree and sign the report, provide additional documentation that might change the result, or disagree and ask for Appeals review. If the proposed change is $25,000 or less for each period, a small case request rather than a formal written protest is generally enough.

Audit letters are about whether your return is correct, not about collecting a known balance. If the audit ends with additional tax that you don't contest, the IRS assesses it and the normal balance-due sequence begins with CP14.

Scam letters copy IRS formatting, so confirm a Letter 525 before acting on it. Log in to your IRS Online Account — most notices, balances and payment history appear there — or request an account transcript. A genuine notice shows a notice or letter number (usually in the top or bottom right corner), the tax year, and explains your rights. If you call, use a number you find on IRS.gov, not a number printed only on a letter you're unsure about. The IRS doesn't demand payment by gift card, prepaid debit card, cryptocurrency or wire to an individual, and it doesn't threaten immediate arrest.

30 days from the date of the letter.

Respond by the date on the letter with the documents requested, or a written explanation. If you disagree with proposed changes, you can request a conference with a manager or ask for review by the IRS Independent Office of Appeals by sending a written protest within the time stated (for 30-day letters, 30 days). Small cases can often use a simple written statement rather than a formal protest.

If you don't respond, the IRS typically issues a statutory notice of deficiency, giving you 90 days to petition Tax Court before the tax is assessed.

If you owe and can't pay in full, you have options:

• Pay in full online through IRS Direct Pay or your Online Account to stop further interest and penalties.
• Short-term plan of up to 180 days, with no setup fee.
• **Installment agreement** — individuals who owe $50,000 or less in combined tax, penalties and interest can usually apply online. Larger balances generally need a financial statement (Form 433-F or 433-A).
• **Currently Not Collectible** status if paying would prevent you from covering basic living expenses.
• **Offer in Compromise** only if you can't realistically pay the full amount before the collection statute expires — most applicants don't qualify.
• **Penalty relief**, including first-time abatement, which can remove failure-to-file and failure-to-pay penalties.

Interest (currently 7% a year, set quarterly) continues on any unpaid balance.

You don't need to pay anyone to respond to a Letter 525. The Taxpayer Advocate Service, an independent organization inside the IRS, helps people whose problems aren't being resolved through normal channels or who face significant hardship. Low Income Taxpayer Clinics offer free or low-cost representation to eligible taxpayers, including in disputes with the IRS. Volunteer programs such as VITA can help prepare missing returns. If you do hire paid help, choose a credentialed professional — a CPA, enrolled agent or attorney — who can represent you before the IRS with Form 2848, and be wary of anyone who guarantees an outcome, demands large upfront fees, or tells you to stop communicating with the IRS. See red flags to watch for.

1. Read the whole notice and note the date, tax year and any deadline.
2. Verify it in your IRS Online Account or with a transcript.
3. Gather records — the return, payment proof and any documents the notice mentions.
4. Decide: agree and pay/verify, dispute with documentation, or request the hearing or appeal the notice describes.
5. Respond in writing or by the method shown, before the deadline, and keep copies and proof of mailing.
6. Get help if needed. You can authorize a CPA, enrolled agent or attorney with Form 2848, and the Taxpayer Advocate Service or a Low Income Taxpayer Clinic may help for free.

Want to see which relief options fit your situation? The free calculator on this page takes about a minute. It's an educational estimate, not a guarantee.