DISCRIMINANT FUNCTION

discriminant function (di-skrim-<<schwa>>-n<<schwa>>nt). An IRS method of selecting tax

returns to be audited. • The  method consists of (1) using a computer program to identify returns

with a  high  probability  of error (such as those  showing  a disproportionate amount of  deductible

expenses),  and  (2)  having  examiners  manually  review  the  selected  returns  to  determine  which

ones  should  be  audited.  —  Also  termed  DIF  system.  [Cases:  Internal  Revenue    4443.  C.J.S.

Internal Revenue §§ 616, 618.] [Blacks Law 8th]