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 System (Discriminant Function System) is used by the IRS to identify tax returns with potentially questionable deductions or credits. This system compares a taxpayer's return to past returns and identifies outliers that may indicate potential errors or fraud. In this case, Tyrone's large charitable contributions relative to his income may trigger the DIF system and result in an audit.

Tyrone Claimed a Large Amount of Charitable Contributions as a Tax