IRS Notice of Defiency... PLEASE HELP!?

My bf provides about 80% of the financial support for his two young nieces ages 2 and 1. His 2009 and return was audited and IRS asked for proof of support that he has provided his dependants. He submitted the paperwork initially and they said it was "unreadable" so they denied his claim and asked for him to repay $4100.00 So he resubmitted more paperwork with greater detail and even mailed it to their office certified. Today, he recieved a letter of defiency, he called again to ask what he was missing and the agent on the phone claimed that no one has even reviewed the doents he submitted the second time, to give them about a week and follow-up again. How are they allowed to do this? What can we do? Can we fight this? Please, any advice is greatly needed!