No disagreements, for the most part. Here's a breakdown of how the IRS reviews a tax return:
- Initial Automated Checks: The Discriminant Function System (DIF) assigns a score to returns based on how they compare to statistical norms of similar taxpayers.
- Information Matching: The IRS matches your return against data from employers, banks, and other third parties (Forms W-2, 1099) to identify unreported income.
- Manual Review: If errors are flagged, IRS personnel may conduct a manual review to determine if an audit is necessary.
- Audit Selection: Returns may be chosen for audit through random sampling, special compliance programs (like TCMP), or, most commonly, anomalies detected by the computer.
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