I found a great article at forbes.com titled Important Points for a Taxpayer in an IRS Audit by Stephen J. Dunn, a US attorney who spealizes in tax controversies.
You might want to read his "easy to understand" article. He:
Discusses attorney-client privlege and how it works;
Includes excellent examples of cases he has been involved with;
Explores the Revenue Agent's entitlements and how to challenge their findings and appeal if necessary.