Generally speaking returns are rated for audit according to a mathematical formula called the Discriminant Function System (DIF). Various weights are assigned to separate items on each tax return, thus permitting the ranking of returns for the greatest potential error.
If your return is selected to be audited, don’t panic. The first thing to do is look over your return. Refresh your memory.Examine the items the IRS questioned in its notice of audit, and organize your records accordingly. For self-employed individuals, most examinations are field audits at their place of business.It is advisable to have a tax professional go over the potential weak spots in your return and represent you at the examination.