What This Form Is

Form 5278, Statement - Income Tax Changes, is a computation schedule. It lists the adjustments to your income tax return and computes the resulting tax, penalties, and deficiency. The IRS uses it for individual, corporate, and fiduciary income tax. Its layout is similar to Form 4549, the examination report. It doesn't show your address.

Form 5278 is not a letter on its own. What it means for you depends on what came with it.

Where You'll See It

  • With a notice of deficiency. The IRS often attaches Form 5278 to a statutory notice of deficiency, such as Letter 531, as the computation of the proposed deficiency. A waiver form, such as Form 4089-B, comes with it for you to sign if you agree.
  • During an audit. An examiner may hand you Form 5278 at a face-to-face meeting to discuss proposed adjustments and penalties before issuing a formal report.
  • In Appeals. Appeals uses Form 5278 for settlement computations.

What to Do

  • Identify the letter that came with it.
  • If it came with a notice of deficiency, find the last day to petition the Tax Court printed on the notice. That's generally 90 days from the notice date, or 150 days if addressed to you outside the United States. Calling or writing the IRS doesn't extend it.
  • If you agree with the deficiency, sign the waiver and return it.
  • Check each line: income adjustments, deductions, credits, and penalties. Read any footnotes.
  • If you received it in an audit meeting, use it to respond to the examiner with documents before the formal report goes out.

If You Disagree

Your options depend on the stage. During an audit, give the examiner documents that support your position. After a notice of deficiency, your main remedy is a timely Tax Court petition.

If you received Form 5278 with an IRS notice and disagree with the numbers, call us at (813) 229-7100.