#1 happened to me a few years ago, the IRS claimed that I didn’t send in a form that I know I sent in. This was for my 2009 taxes that they were just then reviewing. Supposedly the transcript was missing this form and I was told I owed about 3500 bucks. I managed to convince them (by re-sending in the completed form) that I didn’t owe them anything, but I was a nervous wreck until the process was over (about 3 months of waiting).
As I think back on it, I wonder if there was some political motivation to it...
This is why I spend the $200/year to have a CPA do my taxes.
I was audited last year for 2009 & 2010. I thought it was mostly because my wife’s business runs at a loss. Maybe it was because of my political contributions, Tea Party membership, etc.
However, with the exception of creating a log to justify the mileage we wrote off, my CPA handled the rest. We did not even step into the IRS office. IMHO, going to an audit with the IRS without representation of a CPA is like going into court without a lawyer.