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Q: Is a meeting with a "collections" guy the same as an audit?

Not even close. Collections comes after you based upon the IRS' version of what you owe done on the simplest basis i.e. standard deductions, single, only you as exemption (even if married with children).

Q: Does that effectively raise the price paid for the fund shares? Am I possibly in a "double category" in so far as short/long term gains/losses? Are my reinvestments of cap gains/ dividends treated the same as any other purchases?

Yes. Dripping and reinvesting both increase your basis. You probably have both short and long term gains/losses. Reinvestments are treated the same as any other purchases. You have to calculate your cost basis for both long and short term holdings.
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