What Happens After an IRS Audit Assessment?
The Audit Is Over—Now What?
If you’ve received an IRS audit assessment—whether by mail, in person, or via IRS Letter 525 or 531—it means the IRS has finished their review and decided you owe additional tax.
But just because the IRS says you owe doesn’t mean you’re out of options. What you do right now determines whether you can challenge the result, settle your debt, or stop the IRS from pursuing enforced collection like garnishments and levies.
Let’s walk through exactly what happens after an IRS audit assessment—and how to protect yourself.
Step 1: Review the Audit Assessment Notice
After an audit, the IRS sends one of the following:
- Letter 525 – Proposed changes; you have 30 days to respond
- Letter 531 – Notice of deficiency (final determination); you have 90 days to petition Tax Court
- Form 4549 – Report of Examination Changes
This documentation explains what the IRS changed, how much tax you owe, and what penalties and interest have been added.
To make sure the IRS calculations are correct, carefully review your records and consider understanding your IRS tax transcripts—these often reveal where discrepancies began.
Step 2: Decide Whether to Dispute the Results
You have limited time to challenge an audit assessment:
- 30 days to appeal if you received a Letter 525
- 90 days to petition U.S. Tax Court after a Notice of Deficiency (Letter 531)
If you believe the IRS is wrong, you can challenge the IRS through an audit appeal before the balance becomes final. Once finalized, your options are more limited.
Step 3: If You Agree with the Assessment
If you agree with the IRS findings, you can:
- Pay the balance in full
- Request an Installment Agreement
- Explore other resolution options, such as Offer in Compromise
In fact, qualified taxpayers can settle tax debt through an Offer in Compromise for less than the total amount owed. Even if you agree with the assessment, you may also qualify for penalty relief options with the IRS, which can reduce what you owe significantly.
Step 4: Prepare for IRS Collections
Once the balance is assessed and final:
- The IRS will issue a CP14 notice (first bill)
- If unpaid, you’ll receive CP501, CP503, and possibly CP504 (final warning)
- If still unresolved, the IRS may issue Letter 1058 and start enforced collection
That includes IRS Wage Garnishment, Bank Levies, and Tax Liens.
In many cases, you can stop enforced collection with Currently Not Collectible status if you can prove financial hardship. California taxpayers should also be aware of California Franchise Tax Board assessments, which can create additional collection pressure beyond the IRS.
Step 5: Choose Your Resolution Path
Your strategy after an audit assessment depends on your financial picture:
| Option | Use When |
|---|---|
| Offer in Compromise | You can't afford to pay full balance |
| Installment Agreement | You can pay monthly over time |
| Currently Not Collectible | You're facing hardship and can’t pay |
| Appeal or Tax Court Petition | You disagree with the audit results |
We Help Orange County Taxpayers After IRS Audits
At Boulanger CPA and Consulting PC, we represent clients at every stage of the audit process:
- Reviewing audit reports and defending your rights
- Filing appeals or Tax Court petitions
- Preventing levies and enforced collections
- Negotiating settlements or affordable payment plans
For more insights on protecting your finances, you can also learn more in our Defend What’s Yours book.
Call (657) 218-5700 or book online at www.orangecounty.cpa
We’re local, experienced, and ready to help.
Frequently Asked Questions
What does an IRS audit assessment mean?
An audit assessment is the IRS’s formal determination of additional taxes owed after reviewing your return. You’ll receive an examination report that details adjustments and the balance due.
Do I have to accept the IRS’s audit results?
No. You have the right to disagree and file an appeal. The IRS Office of Appeals is independent and reviews cases to resolve disputes without going to court.
How much time do I have to respond after an audit assessment?
Generally, you have 30 days to request an appeal before the IRS issues a Notice of Deficiency. Once that notice is issued, you typically have 90 days to petition Tax Court.
Can I negotiate payment if I owe additional tax after an audit?
Yes. You can request an installment agreement, submit an Offer in Compromise if you qualify, or request Currently Not Collectible status if you cannot pay.
Will penalties and interest apply after an audit?
Yes. Interest accrues from the original due date of the return, and penalties may apply depending on the nature of the adjustment. Penalty abatement may be available if you qualify.
Can California state taxes be affected by an IRS audit?
Yes. The IRS often shares audit results with the California Franchise Tax Board (FTB). This can lead to parallel state assessments unless addressed proactively.
Do I need professional help after receiving an audit assessment?
Professional guidance is highly recommended. An experienced tax professional can evaluate appeal rights, negotiate with the IRS, and help minimize the financial impact.
📣 About the Author
Marc Boulanger, CPA is the founder of Boulanger CPA and Consulting PC, a boutique tax resolution firm based in Orange County, California and trusted by high-income individuals and business owners across Southern California.
With over a decade of experience resolving high-stakes IRS and State tax matters, Marc brings strategic insight to complex cases involving wage garnishments, bank levies, unfiled returns, and six-figure tax debts. He is known for helping clients reduce or eliminate tax liabilities through expertly negotiated settlements and compliance plans.
Marc is a Certified Public Accountant licensed in California and Oklahoma and holds the designation of Certified Tax Representation Consultant. He is a member of the American Society of Tax Problem Solvers (ASTPS) — the national organization founded by the educators and practitioners who have trained thousands of CPAs, EAs, and tax attorneys in IRS representation strategy.
Every case is handled with discretion, proven methodology, and direct CPA-led representation — not call center scripts.
📍 Learn more at www.orangecounty.cpa or call (657) 218-5700.
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