Audit Triggers

What can trigger a tax return to get examined by the IRS?

We don’t know the specific details, but here are some factors that the IRS shares:

1. A high score on The Internal Revenue Service Discriminant Inventory Function System:

The IRS runs tax returns through the Discriminant Inventory Function System. This system assigns a numeric score to each return. If your return has a high score, it is likely you will be selected for an examination.

2. Filed return does not match third party reporting:

Your return could be selected if your filed return does not match what was reported to the Internal Revenue by third parties (1099’s, W-2’s, etc). If you are in doubt, have your tax preparer pull your “Wage and Income Transcripts” from the IRS. This will show you what they have on record.

3. Outside news does not match returns:

Another reason to be selected for an audit by the IRS is if outside information does not agree with a filed tax return. This could be newspaper articles, news stories, public records, etc. We have seen this happen more recently with a reality television celebrity family. If you own multi-million dollar homes and expensive assets, the funds to purchase these things had to come from somewhere.

4. Random Selection.

Number four means that you could do everything that you should and still get selected. The most important thing to do knowing this, is make sure that even if you were to trigger an audit, you have reported all information and it has been done correctly. When you are not sure, you should seek professional assistance.