Letter 525: the examiner has proposed changes

It means the examination stage is closing. Form 4549, the examination report, lists each proposed change and the tax that results. Your choices are to accept it, or to push back with documents and request an appeal.

Proposed is the key word. Until you sign or the time runs out, the changes are the examiner's position, not a final bill. You can accept some items and challenge others.

The IRS Appeals page quotes the letter: "You should file your protest within 30 days from the date of this letter to appeal the proposed adjustments with the Independent Office of Appeals." Count from the date on the letter, not the day it reached you. Source: IRS letters offering an appeal.

Per the Taxpayer Advocate Service, the IRS may disallow what you claimed and issue a Notice of Deficiency. That notice opens a 90-day window to petition the U.S. Tax Court, or 150 days when it is addressed to someone outside the United States. Missing the 30 days skips the Appeals step that a timely protest would have opened.

1. Find the date of the letter and count 30 days.
2. Read Form 4549 and list each change you disagree with.
3. Gather the records for each disputed item.
4. If you need more time, ask the examiner before the due date.
5. Decide between agreeing, sending more documents, or filing a protest.

A protest is a written explanation of which proposed changes you disagree with and why. For each one, it sets out the facts and the reasons the examiner's position is wrong, backed by the records you have. IRS Publication 5, Your Appeal Rights and How to Prepare a Protest If You Don't Agree, lists what the IRS expects to see.

Keep it organized by item, in the same order as Form 4549. Appeals officers are separate from the examiner, so the protest should make sense to someone reading your file for the first time.

Blaga reviews the examiner's Form 4549 with you item by item. She sends more documentation, or asks for more time before the due date. If that doesn't settle it, she can request a conference with the examiner's manager and then a written appeal to the IRS Independent Office of Appeals. Form 12203 may apply if the proposed amount per period is $25,000 or less.

With Form 2848 signed, she stands in for you in those talks. Clients meet her on FM 1960 W in Houston or work through her secure portal. More on the process: IRS audit help.

If you agree, the tax is assessed and billed; a payment plan can follow, and penalty relief is worth checking. If you protest, Appeals reviews the case. If nothing is resolved, a notice of deficiency may be next.