A pair of reports from the Government Accountability Office found serious problems with the Internal Revenue Service’s processes for determining which individuals and businesses should be audited.
In one report, on the IRS’s Small Business/Self-Employed Division, the GAO found the IRS needs to strengthen certain internal controls for the audit. The GAO noted that the SB/SE division uses over 30 methods, called workstreams, to identify and review tax returns that may merit an audit. The returns were initially identified through seven sources which include referrals; computer programs that run filters, rules, or algorithms to identify potentially noncompliant taxpayers; and related returns that are identified in the course of another audit.
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