When the tax man cometh, it's usually first by mail. Roughly 70 percent of audit notifications arrive as computer-generated letters often lacking the key attention-grabbing five-letter word.
"The IRS prefers a slightly nicer word, 'examination,' " notes Elaine Smith of H&R Block.
But the gentler terminology can lull you into a big mistake: doing nothing. "You'd be amazed how many people procrastinate after they get a letter from the IRS," says Benson Goldstein of the American Institute of CPAs.
The letter typically lists specific items on your return that need clarification, and gives you 30 days to provide the information. If you don't, you can expect another letter that's more strongly worded plus a tax bill with additional penalties.