Question

About how many tax returns are selected by the IRS for audits each year?

A) Less than one percent
B) Ten percent
C)Twenty percent
D) Twenty-five percent

Answer 1

Option: A is the correct answer.

A) Less than one percent.

Explanation:

Tax returns are selected for audits in several ways.

The primary way that the IRS selects returns for audit is the Discriminate Function (DIF) system.

The DIF system uses mathematical formulas to weigh the various characteristics of tax returns and score them accordingly.

Less than one percent of the tax returns are selected by the IRS for audits each year.