Midwest Business Services

In case you wonder how the IRS selects random returns for examination. Once the following process has been completed, the selected returns are then reviewed by revenue agents to determine the most likely items that will be productive and to determine audit potential before being sent to the field for an examination.

Discriminate Function (DIF) is a mathematical technique used to classify income tax returns as to Examination potential. Under this concept, formulas are developed based on available data and are programmed into the computer to classify returns by assigning weights to certain basic return characteristics. These weights are added together to obtain a composite score for each return processed. This score is used to rank the returns in numerical sequence (highest to lowest). The higher the score, the higher the probability of significant tax change. The highest scored returns are made available to Examination upon request. The DIF-system involves computer classification to mathematically determine the Examination potential of returns, and manual screening to set the scope of examinations and to select needed workload.

Did you know that Midwest Business Services offers the following assistance to business owners?

Tax Issue Resolution
Fraud Investigation
Forensic Accounting
Business Accounting and Tax Service
Accounting Services for Litigation Support
Expert Witness Services