What This Form Means

Form 4549, Report of Income Tax Examination Changes, is the IRS's audit report for most individual and corporate income tax cases. It shows the adjustments to your taxable income, the corrected tax, and any penalties and interest. Explanations of each change are usually attached, often on Form 886-A, Explanation of Items.

Form 4549 doesn't arrive alone. It comes with a cover letter, such as a 30-day letter after an audit, Letter 1862 when the IRS prepared a return because you didn't file, or Letter 569 when a refund claim is being disallowed. The cover letter sets your response date and explains your options.

What Signing Means

Form 4549 has a signature section. By signing, you agree to the changes, waive the restrictions on the IRS assessing and collecting the tax, and indicate you don't want to exercise your appeal rights on those adjustments. The report is still subject to acceptance by IRS management.

Form 4549-A is the same report without a signature line. The IRS uses it for no-change results, unagreed cases, claims allowed in full, and abatement requests. In an unagreed case it may come with Form 870, a separate agreement form.

What to Do

  • Compare every adjustment to your return and your records.
  • Read the explanation for each change. Know exactly what the IRS is claiming and why.
  • If you agree, sign and return it, then pay or set up a payment arrangement.
  • If you disagree, don't sign. Respond by the date in the cover letter with documents, and request an appeal if the letter offers one.
  • If you agree with some items, say so. Partial agreement is possible and narrows the fight.

If You Don't Respond

For income tax, the next step is usually a statutory notice of deficiency, the 90-day letter. That notice gives you the right to go to Tax Court. Ignore that one too and the tax gets assessed and sent to collection.

If you received Form 4549 and the numbers don't look right, call us at (813) 229-7100.