Letter 525 is the General 30-Day Letter: the IRS has finished examining your return, proposes changes, and is giving you 30 days from the letter’s date to respond before those changes harden into an assessment. It arrives with the audit report itself — Form 4549, showing every proposed adjustment — and Form 886-A, the examiner’s explanation of each one. Nothing in the package is final yet. But the fork it presents is the most consequential in the whole audit process, because one branch — silence — closes the door to IRS Appeals permanently.
General information, not tax or legal advice. Signing the agreement form ends your appeal rights for the issues covered; read Form 4549 line by line before you sign anything.
A precision first: Letter 525 is the 30-day letter for mail (correspondence) exams. Office and field exams send their report under Letter 915 (Examination Report Transmittal) — the same 30-day fork in different wrapping. If your exam was by mail, this is your letter: the machine that produced it is described in the correspondence audit playbook; in-person exams are covered in office & field audits.
Form 4549 (Report of Income Tax Examination Changes) is the money page. For each line of your return it shows the amount you reported, the amount the IRS says is correct, and the adjustment — then the added tax, any penalties, and interest. Walk it in order:
Form 886-A (Explanation of Items) is the examiner’s reasoning, issue by issue — the legal and factual basis claimed for each adjustment. This is the document your response answers: a disagreement that doesn’t engage the 886-A’s stated reason rarely moves the case. Current letters also include Form 14817 (Reply Cover Sheet); include it with your response, and put your taxpayer identification number on every page you send. Responses can go by Secure Messaging, mail, or fax, per the letter’s instructions — mechanics of the response package itself: how to respond to an IRS audit letter.
1. Agree — sign and return the agreement form. The IRS can then assess the tax shown. This ends the matter for those issues: no Appeals, no second look. Sign only when the 4549 is right, or close enough that fighting costs more than the difference.
2. Partly agree — the underused middle path. You can accept the adjustments you know are correct and contest only the rest. Respond by the due date identifying exactly which items you agree to and which you dispute, with documentation for the disputed ones. Partial agreement shrinks the assessed amount, stops interest running on the agreed part, and preserves your rights on the remainder.
3. Disagree — send proof to Exam first. Respond by the due date with added documentation or a written explanation aimed at the 886-A’s reasoning. You may also request an informal conference with the examiner’s manager. If Exam still won’t move, the next stop is a conference with the Independent Office of Appeals — requested before the letter’s response date passes. For small cases — proposed assessment of $25,000 or less per tax period, tax plus penalties — the Appeals request can be made with Form 12203, the small case request; the form’s mechanics are walked through in the Form 12203 guide (the same form serves penalty appeals). The Appeals process itself — protest contents, conferences, settlement — is owned end-to-end by appealing an audit to the Office of Appeals.
4. Do nothing. See below — it is the only choice that destroys an option.
If the 30 days pass with no response, the IRS issues a Notice of Deficiency (the 90-day letter). From that point, as Letter 525’s own text warns, disagreements can no longer be taken to IRS Appeals. Your remaining forum is a petition to the U.S. Tax Court within 90 days of the notice — Tax Court petition basics — a real remedy, but a court filing, with its own hard deadline, in place of the administrative appeal you could have had for the price of a letter. If the Notice of Deficiency is already in hand, Appeals is gone; do not spend the 90 days trying to revive it.
Where this letter sits in the full sequence, from first contact to assessment: IRS audit help.
What is IRS Letter 525? It is the General 30-Day Letter the IRS sends when a mail audit results in proposed adjustments (TaxAct’s explainer and TAS both define it this way). It encloses Form 4549, the report of proposed changes, and Form 886-A, the explanation of items, and gives you 30 days from the letter date to agree, send further proof, or request Appeals. The office/field counterpart is Letter 915.
What happens if I don’t respond to Letter 525? The IRS issues a Notice of Deficiency — and, in the letter’s own words, once that notice is sent your disagreements can no longer be taken to IRS Appeals. Your only remaining forum is a U.S. Tax Court petition filed within 90 days of the notice; if that window also passes, the IRS assesses the proposed tax, penalties and interest.
Can I appeal the changes in Letter 525? Yes — that is what the 30 days are for (the IRS’s appeal-opportunity letters page lists Letter 525 for exactly this). Respond by the due date, optionally after an informal conference with the examiner’s manager, and request a conference with the Independent Office of Appeals; if the amount in dispute is $25,000 or less per period, Form 12203 is the small-case vehicle.
Should I sign the agreement form enclosed with Letter 525? Only if the Form 4549 is correct — or the disputed residue is smaller than the cost of fighting it. Signing is an agreement to the assessment and ends your Appeals rights on those issues (the agree-vs-disagree framing in fedlaws’ and backtaxesdesk’s guides turns on the same point). If part is right and part is wrong, partly agree instead: sign off on the correct items and contest the rest in writing by the due date.
Sources: Taxpayer Advocate Service — Letter 525; IRS.gov — “Letters and notices offering an appeal opportunity”; IRS Publication 3498-A; sample Letter 525 with Form 14817. Currency verified 2026-10-23.