What This Form Means

Form 5701, Notice of Proposed Adjustment, is how an IRS examination team tells you, in writing, that it intends to change a specific item on your return. It is used mostly in large business and international exams, where every proposed adjustment goes out on a Form 5701. Other exam groups use it too. People often call it a NOPA.

Each Form 5701 usually covers one issue. It lists the tax years, the amount of the adjustment, the account or return line affected, and the reasons for the change. A longer explanation is usually attached on Form 886-A, Explanation of Items.

The form itself says the exam team believes the adjustment should be included in the revenue agent's report, and that if you have more information that would change or reverse the proposal, you should provide it as soon as possible.

This Is a Proposal, Not a Bill

A Form 5701 does not assess tax. It is a step inside an open exam. In large business and international exams, the team is supposed to discuss its position and the law it relied on with you before issuing the form, and to set a response date with you. If you didn't agree on a date, the issue manager sets one.

What to Do

  • Read the Form 5701 and the Form 886-A closely. Check the facts, the years, and the amounts.
  • Mark one box: Agreed, Agreed in Part, Disagreed, or Have additional information with the date you will submit it.
  • If you disagree, give a written response by the response date that explains in detail the legal position you rely on.
  • If you disagree in part or in full, the form lets you ask for Fast Track Settlement consideration.
  • Keep copies of everything you sign and send.

If You Disagree

Disagreeing does not end the exam. The team weighs both sides and may use other resolution tools. If the issue is still unagreed, the case moves to unagreed procedures, which typically means a 30-day letter and the chance to file a protest with the Independent Office of Appeals. Get your facts in front of the exam team early. If new information shows up for the first time after the case reaches Appeals, the case can be sent back to the exam team to consider it.

A NOPA is where the real fight over an issue starts. What you put in writing now shapes the rest of the case.

If you received a Form 5701 and want help responding to the proposed adjustment, call us at (813) 229-7100.