How Does the IRS Determine Which Tax Returns to Audit?
By: LawInfo
According to the IRS, tax returns are selected to be audited in one of two ways: (1) the IRS uses computer programs to identify returns that may have incorrect amounts. These programs may be based on information returns, such as Forms 1099 and W-2, on studies of past examinations, or on certain issues identified by compliance projects; and (2) the IRS uses information from outside sources that indicates that a return may have incorrect amounts. These sources may include newspapers, public records,and individuals. If the IRS determines that the information is accurate and reliable, they may use it to select a return for "examination."
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