Unless the IRS tells you why your were audited you can only speculate. For income tax returns (as opposed to estate tax returns reviewed by IRS attorneys) the process is supposedly random and computer driven. In your case without all the facts it would be hard to make an educated guess as to why you were audited -- best thing you can do is comply cooperatively and if you're lucky you might get a refund or owe only a small additional amount. Don't panic for now. Wait and see what the outcome is.
This answer is based on general legal principles only and is not intended to provide specific legal advice. This answer is for informational purposes only and does not constitute the formation of a lawyer-client relationship. Any reader of this answer should not make decisions based upon in without first directly consulting with an attorney
I suspect you are talking about an amount that is less than $25,000. If that is the case, you should contact the IRS telephone number on the collection notice and get into a fast track, streamlined, direct debit installment agreement. Normally, they will allow you to pay over 6 years and will refrain from placing a lien on you. Even if a lien has already been placed, they will usually withdraw the lien once you make three payments under the direct debit installment agreement. Then, you can turn back to the IRS, get copies of your account transcript, and get information on the examination using the freedom of information act to do so. Once you gather that information speak to a CPA or tax attorney for guidance. At that point, if they believe you have been wronged, you can proceed on getting the tax adjusted back. If so, any payments you have made beyond the liability will be refundable, so long as you make the claim within 2 years of the payments.
Marty Davidoff, firstname.lastname@example.org, 732-274-1600. This answer is provided for general information only. You should seek advice from an attorney or tax professional.
You should contact the IRS to see what the status of your case is. See if a determination has been made. IF you are unable to get an answer from them, I recommend you contact the taxpayer advocate service at 1-877-777-4778, or an attorney or CPA.