IRS Notice Letter 525
Audit Notice
You're being audited. The IRS wants to examine specific items on your tax return and is requesting documentation.
Tax Attorney · Villanova University School of Law · Admitted in Delaware, New Jersey, United States Tax Court
Notice Letter 525 in Plain English
Letter 525 (the '30-day letter') is the IRS's proposed adjustments after an audit — but before the assessment is final. You have 30 days to accept, protest, or ask for an Appeals hearing. This is the last chance to fight without going to Tax Court.
Why the IRS sent you a Letter 525
An office or correspondence audit examined a specific return and the examiner is proposing changes.
The IRS disallowed deductions (typically business expenses, charitable contributions, or dependency claims) after requesting documentation.
An issue was raised on a related return (e.g., a Schedule C loss carrying over to your personal return).
What Happens If You Ignore Notice Letter 525
Failure to respond or provide documentation can result in the IRS disallowing deductions and assessing additional taxes.
Every day you wait, penalties compound, interest accrues, and your options shrink. The IRS does not negotiate well with silence — they escalate.
What To Do About Notice Letter 525
Don't panic. Gather the requested documents and consider having professional representation during the audit.
- 1
File a written protest within 30 days requesting an Appeals conference — this moves the case away from the auditor to an independent officer.
- 2
Include a point-by-point rebuttal citing IRC sections, Treasury regulations, and case law for each disputed item.
- 3
Do not simply agree to 'take the win' on some items — negotiate the whole package, since Appeals routinely trades off items.
- 4
If your protest exceeds $25,000 in tax, it must be formal — small-case procedures are lighter but only for smaller balances.
A Senior Tax Attorney's Take on Letter 525
Appeals officers close their own inventory. That gives them settlement authority the auditor does not have — hazards of litigation, procedural weaknesses, and tradeoffs are all on the table. A well-drafted 30-day protest is the single highest-value document in most audits.
Call (877) 829-5267Costly Mistakes People Make With Notice Letter 525
Letting the 30 days lapse and receiving a Notice of Deficiency, then losing the low-cost Appeals path.
Filing a protest that argues facts already conceded in the audit — Appeals only re-hears facts you preserved.
Trying to introduce new records that were requested but not produced during the audit; Appeals can, and will, ignore them.
IRS Notices Related to Letter 525
These are the notices the IRS most often sends before, after, or alongside a Letter 525. Read the related ones to understand where you are in the collection sequence.
Tax Resolution Services That Resolve a Letter 525
Senior tax attorneys at McCauley Law Offices use these strategies to stop, settle, or unwind a Letter 525 notice.
Primary Sources & Authority
We cite the underlying IRS publications and statutes so you can verify everything on this page.