I cut big corners on my tax returns and received an audit notice; what do I do?

This case demands that you hire a representative for your audit. Depending on how big the corners are, you may have a case that would lead to a return that is deemed to be fraudulent. What constitutes tax fraud: a willful act done with the intent to defraud the IRS — that dark area beyond honest mistakes.

For instance, your taxable income in this setting as you reported it was, let’s say, $100. During the course of your audit, the IRS representative determines that your taxable income was, in fact, $200 and there were a number of income items not reported.
Because your adjusted taxable income has increased by 100% (here from $100 to $200), there is a chance your filing may be deemed to be fraudulent. The fact you have not reported income may increase that determination.

Fraud, as it applies to taxes, is a VERY big deal. Civil fraud penalties may amount to 75% of the tax owed. Criminal tax fraud may involve penalties up to 100% of the tax owed and may include time in federal prison. Be careful here!