The most important thing in handling the audit is advance preparation. When you get into the IRS office, you will have to produce your records quickly. They ought to be organized by topic so that you do not waste time leafing through pages for a receipt or other document. Providing the agent questions an item not mentioned in the notice of audit, refuse politely but firmly to answer the questions. If you you have nothing against the agent's proposed changes, you will be asked to sign a Form 870, which, when signed, permits an immediate assessment of a deficiency plus penalties and interest, if due. In case you don`t agree with the agent and the examination takes place in an IRS office, you might ask for an immediate meeting with a supervisor to argue your side of the dispute.

As the IRS is not able to examine every return, it follows a policy of examining returns which, upon preliminary inspection, indicate the largest possible source of potential tax deficiency

It is a fact that:

• One rated returns for audit according to the discriminant function system (DIF).
• One might hold an examination may by correspondence, at a local IRS office, or at the taxpayer's place of business, office, or home
• The first thing to do is care about your return
• Examine the items the IRS questioned in its notice of audit, and organize your records accordingly.