A Taxpayer's Return Is Classified for Audit After Receiving a High

question 42

Multiple Choice

A taxpayer's return is classified for audit after receiving a high DIF score and being manually screened by an IRS classifier. Which of the following statements best describes whether the taxpayer will be contacted by an auditor or revenue agent?

• A)The taxpayer will be contacted since a high DIF score always will mean some type of audit.
• B)The taxpayer will be contacted because only the National Office has the power todecide that after screening, the return need not be audited.
• C)The taxpayer will not necessarily be contacted since after the Service Center review, it may be decided that an audit is unwarranted because the return will be manually inspected for audit determination.
• D)The taxpayer will not necessarily be contacted by an auditor or revenue agent since after the return is screened by the Service Center, it then is randomly selected for audit.

Realize that accounting is not an exact science and the implications of this on financial report usability.

Recognize the significance of trends and relationships derived from financial statements for evaluating a company’s economic opportunities and risks.

Appreciate the multifaceted uses of financial statements by a range of stakeholders, from regulators to taxing authorities and loan issuance.

Understand the importance of information symmetry and the role of management in sharing accurate information.

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Definitions:

Workingmen's Parties

Early political organizations in the United States, formed in the 1820s and 1830s, that aimed to advocate for the rights and interests of laborers and workers.

Free Public Education

The provision of education that is funded and administered by the government, ensuring that all citizens have access to education without charge.

Workday

The number of hours or the specific period during which an employee is expected to be at their job performing their duties.

Unions

Organizations formed by workers in various industries to collectively bargain for better wages, working conditions, and benefits.