• October 9, 2015
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Many of our clients feel as though they have an IRS target on their back.  Once the IRS has them in their sights they begin to attack and won’t let up.  Why do some taxpayers have to go through this year after year?  This post gives insight how the IRS selects individuals and companies for audit.

The IRS uses a variety of methods to select returns for review:

  • One of the ways the IRS selects tax returns for audit is by obtaining information about individuals or companies that promote or participate in tax avoidance transactions. One typical example of these transactions is when for-profit entities use tax-exempt entities such as charities to avoid paying tax.
  • The IRS may also selects returns based on a method called ‘Computer Scoring’. In this method, each return gets a numeric score. The two types of scoring systems are the Discriminant Function System (DIF) and the Unreported Income DIF system (UIDIF). They rate based on the potential for change in income and the potential for being unreported, respectively. Both systems rate based on experiences from past filings by taxpayers. IRS officials screen the returns that are rated the highest and select a few for the purpose of auditing and in-depth investigation of items that need to be reviewed.
  • Information mismatch is another criterion for selecting a return for tax audits. At times, reports such as Form 1099 – Interest statement from the bank or Form W2 from the employer, may not match with the income reported on the taxpayer’s tax return. In such cases, the IRS and flag the return for audit.
  • Large corporations are frequently targeted for audit to verify that accurate returns have been filed.
  • Even in cases where the taxpayer’s return may be related to an issue or transaction of another taxpayer, the IRS may select the related taxpayer’s return for the purpose of auditing both returns. The taxpayers may be related in any manner, such as being business partners, investors, friends, and family, among others.


If your tax return has been selected for audit, we can guide you through the process. We solve IRS problems.

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What Our Clients Have to Say

Susan WilsonSusan Wilson
03:27 25 Jan 23
I have been very pleased with the solid counsel and guidance that Nick Nemeth has provided me regarding my tax issue. I found him to be honest and straightforward which I appreciated. I was impressed with his relevant experience and knowledge . He has definitely brought me peace of mind during a difficult and stressful time.
Sarah HowardSarah Howard
03:44 14 Nov 22
I would like to thank Mr. Nick and his staff for the superb help that I received from them. My IRS problem was resolved quickly and efficiently. It took 2 visits to convince me that I was over my head. I thought that I could call the IRS, appeal my tax notices and settle on a payment plan on my own. After many phone calls to the IRS, waiting sometimes more than 4 hours with no resolution to speak of, it proved to be extremely difficult and stressful. Revisiting Mr. Nick was a huge wake up call. My account was reviewed, and a payment plan was established with the IRS within a week. I will be forever grateful to the staff who worked on my case and especially to Lorna who listened to me vent while going through this painful process.
00:33 07 Aug 22
I cannot say enough good things about Nick and his team. When I first met with Nick he was up front, honest, friendly and efficient. When I worked with one of his attorneys, Eric B, I was just as pleased. All of the staff there are nice and very helpful. I wish I hadn't waited so long to get help with my issue. Over 6yrs I tried getting through and getting anywhere with the IRS and hardly made any progress. I know this may not be the case for all, and even I thought it would take longer than it did, but 3mos and they had my situation straightened out. I still can't believe it. Thank you thank you THANK YOU for all that you did for me. This is a huge burden gone out of my life now thanks to you. If anyone needs help out there, I know you may not want to shell out more money to get their help but it may just save you in the long run.
Spoilly GirlSpoilly Girl
23:49 03 Aug 22
The Nemeth Law team is exceptional. They treat their clients like a family member who is in crisis. They want you to get the best possible outcome. I really appreciate everything that they did for me. Jake and Ashley had the greatest role in my case and it all turned out for the best for me. Thank you Nick and team for easing my fears and getting me through the long process. I'm truly grateful.
Eddie WaltEddie Walt
19:44 12 Jul 22
During a time in which competent, professional service at a fair price seems to have disappeared, Mr. Nemeth and his team are a refreshing breath of fresh air.From my first phone call to the final settlement of our case with a non-responsive IRS, they under-promised, over-delivered and were in constant courteous contact to make sure we knew exactly what was happening and where we stood.I hope to never need their services again, but, should I receive another friendly letter from the IRS...I know who to call!
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