In the last several months, the IRS kicked off a nationwide program of random audits of individual returns, known as the National Research Program (NRP). This program is focusing on the 2001 1040s, and is intended to assist the IRS in identifying, in a survey fashion, areas of non-compliance that may warrant more scrutiny.

It has been almost 15 years since the IRS last conducted audits to improve their statistical data. This type of widespread approach suggests that some individuals who would be unlikely audit candidates may now receive that dreaded exam appointment letter from the IRS.

Whether it is the misfortune of drawing an NRP audit, or more likely an IRS computer-generated notice, here are a few words of general advice. First, never deal with IRS notices or exams without professional representation. An amazing number of IRS computer-generated notices and assessments are simply erroneous. If the IRS computers receive a 1099 or other income report that doesn't readily square with your tax return, the computer simply generates an assessment – no questions asked! Often, this income has been reported in a different location within the tax return, or alternatively the 1099 is erroneous or perhaps caused by an IRS keypunch mistake.

When an actual audit arises, it is critical to have a professional on your side who understands the tax law. Taxation has more than its share of gray areas, and IRS examiners will often become overly aggressive when they deal with taxpayers who are not represented by a knowledgeable tax advisor.