IRS Uses Secret Computer Scores To Select Tax Returns for Auditing

The IRS has a secret weapon in selecting returns for audit—the discriminate information function score, or DIF, which mathematically sorts returns by computer, a Latham & Watkins associate said Oct. 19.

“Its purpose is to recognize where issues are hiding. It’s a mathematical process that is highly secretive within the service,” Sean Atkins told a D.C. Bar Association session on IRS tax audits.

“Its goal is to determine the likelihood of a tax change related to a particular return. Figures from a particular return get fed into a system and the mathematical computation works out where the likelihood is,” he ...