ou weren't really surprised, were you? It made for great theater, but the fact that a few Internal Revenue Service agents routinely intimidated, cajoled and threatened poor taxpayers was not really beyond what many of us intuitively believed.

After all, it's only with an IRS audit that, in the United States, you're guilty until proven innocent. So when the IRS calls, most people panic.

What do you do?

Don't panic. Remember that an audit is merely an exercise where you are asked to prove the deductions you claimed on your return. The audit process itself, however, may be both costly and time-consuming even if you win. The objective here is to give you the strategies and techniques to minimize your audit pain.

Never attend your own audit. If the audit is simple, you can substantiate your claims by just mailing in the receipts.

Alternatively, if the audit agent wants a face-to-face meeting, you probably shouldn't be there. Hire an accountant or an attorney who specializes in tax representation. While you may be completely clean, you are not trained in what not to say. A seemingly innocent remark might lead the auditor into new areas which, even if you can substantiate the expenses deducted, adds to your frustration and costs you more in time and aggravation.

If new items arise where you would not be comfortable, a representative can tell the agent that he doesn't know the answer and buy time to find the appropriate response. If you were personally there, that opportunity to think and reorganize before you respond would be lost.

Know your rights. If an auditor becomes abusive or unreasonable, demand to speak with the auditor's manager. If that doesn't end the problem, contact your local IRS Problem Resolution Office.

The IRS instituted these offices to handle problems that have not been resolved through normal channels. Problem resolution officers are ombudsmen who represent you and help you deal with "the system" when that system breaks down. You can check out the IRS local assistance map that provides information about the nearest offices in your area.

An Internal Revenue manual supplement details the rights to which you, as a taxpayer, are entitled. They include:

If you are concerned with an agent denying you these rights, you have an absolute right to have your audit tape-recorded. Both you and the IRS will have the opportunity to record the audit, insuring that there are no questions as to what was said, by whom and when.

The IRS has recognized the problem of employee misconduct and has responded. President Clinton announced a reform plan that he says will eliminate any "abuse, bullying or callousness by officials of our government." The president proposed customer-friendly measures such as keeping IRS phone lines open 24 hours a day and creating an IRS board of trustees with a majority of its members to be selected from the private sector.

Let's assume the IRS agent acts professionally but you still disagree with his findings. What can you do? First, speak with the agent's group manager to see if the problem can be resolved at that level. If that is not successful, you can appeal the agent's conclusions by requesting a conference with the IRS Appellate Division.

If you can, it is best to try and settle at the agent level. If the tax deficiency is small, it may not justify the cost in time and dollars of pursuing your case to a higher level. Moreover, if the agent missed items that you don't want questioned, your best approach might be to pay the deficiency and run.

However, the IRS tells its appellate personnel to negotiate settlements "on a basis which is fair to both the government and the taxpayer. Strive to close on an agreed basis the highest possible number of cases." They are instructed to settle and, unlike agents at the audit level, appeals officers can settle cases on the basis of "hazards of litigation." Thus, in appeals, it is possible to split or trade issues. Moreover, appeals officers more typically are attorneys or certified public accountants. They may be more knowledgeable and professional about issues presented. They clearly will be more flexible.

If you are unsuccessful at appeals, you will receive a "90-day letter." This is a notice of deficiency that's your ticket to the tax court. However, you must file that tax court petition within 90 days of the date on the letter. If you fail to file within the 90-day period, you lose. You must pay the tax and sue for a refund in U.S. District Court.

In tax court, you don't have to pay the tax before your case is heard by a tax court judge. If the law is on your side or if you do not have the money to pay the tax, this is the best way to go.

If the strict interpretation of the law is against you, but "equity" is on your side, pay the tax and sue for a refund in federal district court. Only here is your position heard by a jury, so justice and emotion can be strong elements of your case. But you must first pay the tax.

Alternatively, if you pay the tax first, your case can be heard by the U.S. Claims Court. There may be issues where the tax court or the district court has interpreted the law one way and the claims court has interpreted it in another. The choice of forum here may in fact be choice of law, and you want that law interpreted in your favor.

The above court decisions can be appealed all the way to the Supreme Court. But if you lose, you might file an Offer in Compromise with the IRS (Form 656). This is a contract with the IRS whereby you recognize your tax liability but offer to satisfy it for less than its full amount. Moreover, you may pay your "offer" over a period of years. If you have neither the income nor the assets, the IRS can't get blood out of a stone. They will usually accept a reasonable offer.

There are horror stories of rogue IRS agents who ignore the law and terrorize taxpayers. Most if not all of the stories are true. But what the headline-grabbing politicians fail to recognize is that these agents are few in number within a huge bureaucracy, and that these agents are not only breaking IRS internal guidelines, but the law itself. IRS agents themselves have exposed many of these rogue agents.

Unfortunately, only taxpayers who know their rights can enforce them. If an agent breaks the law, expose that agent! Immediately complain to the group manager, call the Problem Resolution Office and call your local congressional and Senate offices. Let them do the fighting for you. When you fight a Goliath, you want someone with a big sling.

When the IRS is at your door, don't panic. Treat the agent with respect as a professional. Give the agent the name, address and phone number of your representative and shut up. Don't volunteer any information and don't answer any questions. Let your representative actually represent you. If you keep your emotions out of it and your representative does his or her job, you will actually survive the audit - I promise!