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

question 4

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) Yes, the taxpayer will be contacted since a high DIF score always will mean some type of audit.
• B) Yes, the taxpayer will be contacted because only the National Office has the power to decide that after screening the return need not be audited.
• C) No, the taxpayer will not necessarily be contacted since after the Service Center review, it may be decided that an audit is unwarranted.
• D) No, the taxpayer will not necessarily be contacted by an auditor or revenue a agent since after the return is screened by the Service Center, it then is randomly selected for audit.

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Definitions:

Replenishment

The process of refilling inventory levels to ensure sufficient stock is available for future sales or production demands.

Bank Reconciliation

The process of comparing and contrasting the bank statement with a company's financial records to identify any discrepancies.

Bank Service Charges

Fees charged by banks for various services such as account maintenance, transactions, or overdrafts.

Deposit In Transit

Money that has been received and recorded by a company but has not yet been reflected in the bank's records.