What types of audits are there?
Regarding IRS audits, there are different types of audits now. The most contact that you'll have would be what they call a CP2000, which is a correspondence audit even though they say it's not an audit; but they do a computer matching of W-2's, 10-99's, and 10-98's with the items reported on your return, and if they're unable to match it, they send you a letter saying, 'We show that you didn't report this on your return, and this is how much money you owe, and this is an underpayment penalty as well.' You can do that by mail, show them that it was reported, or if not, say 'hey, I'm sorry, I made a mistake, I'll pay the tax and the interest, but it was an honest mistake - I didn't get the K-1 or the 10-99 or I moved, so please don't asses the penalty.' - That'll work. They also now have in-office correspodence review audits, where the IRS will question one or two items on your return and ask you to mail in substantiation of those items. That, and the first one, a tax payer could probably do by themselves. The third type is where it's an office audit, where they require you to come into their office and bring the substantiation with you. In that type of audit, you definitely should be represented by someone. The final type of audit is the field audit, that's where the Internal Revenue agent comes to your place of business, or your home - looks around, walks around, asks questions, and questions you about it. You should definitely be represented by a CPA or a road agent.
