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 Discriminate Function System (DIF System) is used by the IRS to identify tax returns that have a higher likelihood of containing errors or discrepancies. The system uses a mathematical formula to generate a score for each tax return, and the returns with the highest scores are selected for audit. One factor that can increase a taxpayer's DIF score is claiming a large amount of charitable contributions relative to their income. Therefore, it is likely that Tyrone's tax return was identified for audit through the DIF System due to his high level of charitable contributions.

Tyrone Claimed a Large Amount of Charitable Contributions as a Tax