Frost & Associates, Attorneys at Law
Call Today 202-618-1873

How does the IRS decide which taxpayers to audit?

An IRS audit can seem like it came out of the blue. “Why me?” is a common question for individuals and businesses facing federal scrutiny into their income tax returns.

The IRS has several ways of selecting the tax returns it chooses to audit. These include:

  • Computer scoring. Returns get screened by computer software called the Discriminant Function System, or DIF. The system assigns individual “scores” that rate returns for potential for unreported income, when compared with similar tax returns from the past. The higher the DIF score, the more likely that IRS agents will select it for an audit.
  • Information matching. Another possible reason a person gets audited is because information on payer forms, like the Form W-2 from his or her employer, does not match the information given on the tax return.
  • Tax avoidance transactions or foreign accounts. The IRS may investigate taxpayers for abusive tax avoidance practices. Evidence of these transactions could trigger an audit.
  • Related examinations. Even if a taxpayer’s return does not seem suspicious on its own, the IRS may select it for audit if the taxpayer is somehow connected to others who are being audited, like business partners or investors.

An audit can be time-consuming, invasive and stressful. The IRS will likely ask many questions in its quest to obtain evidence against you. Perhaps the best thing someone being audited can do to protect themselves is to hire a tax attorney. The lawyer can act as a buffer between the agency and the taxpayer, for example by appearing on the taxpayer’s behalf during the audit appointment.

No Comments

Leave a comment
Comment Information
Every Tax Problem Has A Solution

Bold labels are required.

Contact Information
disclaimer.

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

close

Privacy Policy

Contact us today!

Frost & Associates, Attorneys at Law
1629 K Street NW
Suite 300
Washington, D.C. 20006

Phone: 202-618-1873
Phone: 202-618-1873
Fax: 888-235-8405
Washington Law Office Map

Columbia Office
10440 Little Patuxent Parkway
Suite 300
Columbia, MD 21044

Phone: 202-618-1873
Phone: 202-618-1873
Fax: 888-235-8405
Columbia Law Office Map

Annapolis Office
888 Bestgate Road
Suite 400
Annapolis, MD 21401

Phone: 202-618-1873
Phone: 202-618-1873
Fax: 888-235-8405
Map & Directions

Fairfax Office
8280 Willow Oaks Corporate Drive
Suite 600
Fairfax, VA 22031

Phone: 202-618-1873
Phone: 703-621-7169
Fax: 888-235-8405
Map & Directions

Rockville Office
199 E. Montgomery Avenue
Suite 100
Rockville, MD 20850

Phone: 202-618-1873
Phone: 240-599-5009
Fax: 888-235-8405
Map & Directions

Google+
Find us on...
  • Facebook
  • Twitter
  • Linked In