Tyrone claimed a large amount of charitable contributions as a tax deduction relative to taxpayers with similar levels of income. If Tyrone's tax return is chosen for audit because of his large charitable contributions, which audit program likely identified Tyrone's tax return for audit?

Question

Quizplus · Accepted Answer

The DIF (Discriminant Index Function) system is designed to identify returns that have a high probability of containing substantial errors or fraud. One of the factors that could trigger the selection of a return for audit under the DIF system is the claiming of unusually high deductions, such as charitable contributions, relative to other taxpayers with similar income levels. Therefore, if Tyrone's tax return is chosen for audit because of his large charitable contributions, it is likely that the DIF system identified his return for audit.

Tyrone Claimed a Large Amount of Charitable Contributions as a Tax