Have you recently displayed audit red flags that caused you to faced an IRS tax audit? If you have, you've probably have a lot of IRS audit questions and been waiting anxiously to find out what the agency has decided in your case. When you receive Audit Letter 525 in the mail, the IRS has reached a decision regarding whether you made mistakes on your taxes.
What does Audit Letter 525 mean? Are you required to take any action upon receiving it? Do you have any options if you disagree with the IRS audit ruling?
What Does Audit Letter 525 Mean?
The audit letter serves to inform you that the IRS has finished the audit review. The agency has either decided that you owe additional funds or that additional funds are owed to you. In the audit letter, you'll learn the exact difference of the refund or balance due.
To find out which result you have, you'll have to read the form carefully. Pay special attention to the "Explanation of Notice Response Requirements" section. In this area, the IRS states the exact adjustment and the amount. For example, if your refund has been increased, you'll see that exact amount of the increase listed in this section. Along with the adjustment, this section will also state the action you are expected to take to comply with the ruling.
What to Do after Receiving Audit Letter 525
If you are unsure about why the agency has reached its conclusion, you can look at the "Explanation of Items" section to find out the reasons for the adjustment. The "Calculation Sheets" should give a detailed explanation of the process the IRS used to recalculate your refund or balance due.
After you review these areas, you'll need to decide whether you agree with the findings. If you agree, you can simply sign on the appropriate consent line and then send the signed form back to the IRS. But what if you're unsure about the findings? You can always talk with an experienced tax professional who can help you evaluate the problematic audit result.
What If You Disagree with the Result?
If you disagree with the finding or if you believe the agency may have made an error, you are not legally required to sign the form and return it. Rather you can request an appeal of the audit ruling by calling the telephone number listed on the audit letter.
If you prefer to contact the IRS by mail, send a copy of the stated changes as shown by the IRS, along with a letter explaining why you disagree with the findings. Be sure to complete this process within 30 days of receiving the audit letter, so that the agency will begin the appropriate appeal procedure.
Receiving Audit Letter 525 may result in a disappointing realization or a pleasant surprise. Either way, be sure to examine the form thoroughly and then request additional help before you decide whether to agree with the IRS audit findings.
