Which of the Following Statements About the DIF Score Is

question 29

Multiple Choice

Which of the following statements about the DIF score is true?

• A) Details of the DIF score computation are available on the IRS website.
• B) The lower the DIF score assigned to a tax return, the higher the probability that the return will be selected for audit.
• C) Theoretically, the DIF score measures a tax return's potential for generating additional revenue on audit.
• D) Taxpayers can contact the IRS to determine their DIF score before filing their annual tax return.

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Definitions:

Long Run

A period during which all factors of production and costs are variable, and firms can enter or exit the industry.

Total Revenue

The gross revenue from selling products or services before deducting any costs.

Fixed Cost

Expenditures that do not change with the level of production or sales, such as rent, salaries, and insurance.

Total Cost

the complete cost of production including both fixed and variable costs.