Finally we have resolution.
I think it was a day or two after we received the last notice that we noticed a large deposit into our bank account that was unexpected. It was from the IRS. Ta-Da!
It was a bit disconcerting though - it was only for $2400 or so - not the full $4300 that we were expecting. Not having any documentation at that point we figured they had made some other calculation than we had and adjusted our final refund. Frankly, we didn't care and were happy to have that amount and some closure.
A few days later we received not one but two letters in the mail (one to each of us) explaining that we were going to receive the $2400. Each enveloped was stuffed with another envelope to be used for payment and instructions to make a payment, if we wished to do so. If the government wanted to save money I could think of at least a few ways to do it starting with not sending envelopes for payment to people who have already received a refund through electronic payment, or, even better not sending 2 in seperately addressed mailings. Just sayin'
The day we received the letter(s) from the IRS we received a phone call from the agency working on our audit on our behalf. (during dinner). They wanted to let us know they received the communication from the IRS about our refund (with payment envelopes perhaps?). We confirmed we received it as well. They said they'd found an error in the IRS calculations.
(You'd think after all this time spent auditing they would have it right by now).
We were correct after all and the agency took it upon themselves to notify the IRS (again) of the correct amount and the IRS at that point had committed to fixing it and giving us the full refund that was due to us, as submitted in March.
Last week we received another set of notices in the mail from the IRS (complete with payment envelopes...) that said they were making the correction. I don't know if the money has hit our account yet - I haven't checked personally but I will.
That day we also received a note from someone affiliated with the IRS saying we would be asked to complete a survey on how well the IRS handled our audit. A separate note to tell us another note would be coming....
I'll be watching for that.