0
There are essentially two ways your return could be selected for examination. One is the infamous "Red Flags". These are not printed anywhere but when the tax returns have very high expenses without corresponding income that is a Red Flag. Tax returns claiming the Earned Income Tax Credit that show someone earning just enough Self Employment Income that allows the filer to get the maximum amount of EITC is a Red Flag. That sort of thing.
However, the MAJORITY of tax returns selected for examination are through the Differentiation process. All tax returns filed are compared against some "models" of returns on file on the Cray Supercomputers at the IRS Computing Centers. How "different" a return is from the model results in a "Differentation Score" commonly referred to as the Dif Score. A Dif Score above a secret number level qualifies a return to be eligible for examination. Then it's just a matter of "luck" whether the computer will select your return from amongst the millions of others eligible for examination.
What else can I help you with?
Difference between audit plan and audit program?
an audit program may contain several audit plans
What is the process of preparing an audit?
The process of preparation for audit depends on the kind of audit to be performed, it's objective and scope. The scope of the audit is key to the planning process. The planning required or statutory audit is different from internal audit; it also differs from forensic audit?
What are the advantages in having an audit committee?
the audit committee communicate with internal audit, external audit and CFO on behalf of the company.
Difference between cost audit and financial audit?
Cost audit is done to audit the cost elements of unit costs while in financial audit, audit of financial statements is done to find out information provided is true and fair or not.
When is audit programme compiled?
before the start of audit
Differences between IS Audit nad Traditional Audit?
what is the differences between IS Audit and traditional Audit?
3 general types of quality audits?
3rd Party Audit - Independent Audit 2nd Party Audit- Customer Audit 1st Party Audit- Internal Audit
How does an audit manager write up a letter to the audit partner?
How do I write a audit letter about concerns on an audit
What is the Difference between HR audit And Financial Audit?
Under HR Audit, audit of HR procedures and process is done while in financial audit, audit of finance related matters are done.
Differences between audit plan and audit program?
difference between audit program audit & note book
Difference between audit plan and audit program?
an audit program may contain several audit plans
What is the process of preparing an audit?
The process of preparation for audit depends on the kind of audit to be performed, it's objective and scope. The scope of the audit is key to the planning process. The planning required or statutory audit is different from internal audit; it also differs from forensic audit?
How would you save against disadvantages of continuous Audit Compare between Continuous Audit and Periodical Audit?
How would you save against disadvantages of continuous Audit Compare between Continuous Audit and Periodical Audit?
What is audit committee?
Audit Committe enhance communication between Internal Audit, External Audit and CFO. Audit Committe assist directors to avoid litigatio risk.
What are the advantages in having an audit committee?
the audit committee communicate with internal audit, external audit and CFO on behalf of the company.
What is an audit. Types of audit?
TOBBACCO
What is shop audit?
Shop audit
