What Is IRS Letter 525?

IRS Letter 525 — also called the 30-day letter or the General 30-Day Letter — is typically sent after an IRS examination (audit) of your tax return has been completed and the examiner is proposing specific changes. It's called a 30-day letter because you have 30 days from its date to respond before the case moves to the next stage.

The letter will come with a Revenue Agent's Report (RAR) or an examination report detailing exactly what the IRS examined, what adjustments they're proposing, and how those adjustments change your tax liability, penalties, and interest. The proposed changes might cover things like disallowed deductions or credits, unreported income, or errors in how certain transactions were characterized on your return.

After receiving Letter 525, you have three main options: (1) Agree with all the proposed changes by signing the agreement form and paying the additional amount owed; (2) Partially agree and dispute only the items you disagree with; or (3) Disagree with all proposed changes and request a conference with the IRS Office of Appeals. The Appeals Office is independent from the examination function and often resolves disputes without going to court — many cases are settled at Appeals at a compromise between the taxpayer's and examiner's positions.

If you don't respond to the 30-day letter within the deadline, the IRS will issue a Statutory Notice of Deficiency (CP3219A) — the "90-day letter" — which gives you the right to petition the U.S. Tax Court but represents a formal escalation of the dispute. The 30-day letter is generally your best opportunity to resolve an audit dispute at the least cost and with the most flexibility, so it's worth responding even if you disagree with all the proposed changes rather than letting the clock run out.