Question : Internal Revenue Service Statistics Question…?
IRS auditors routinely check tax returns to determine whether calculation errors have been made, or to detect evidence of fraudulent statement entries. There are several methods that tax filers use to avoid income tax. One method involves failing to declare various sources of income. Auditors utilize a number of techniques, including examining spending patterns as a method of possible detection. Another attempt at tax fraud involves fabricated deductions that are baseless. After analyzing the returns of thousands of self-employed tax filers, an auditor has determined that 45% of significantly fraudulent returns contain two suspicious deductions, 28% contain one suspicious deduction, and that the remainder contain no suspicious deductions. The auditor has also determined that for correct returns, 11% contain two suspicious deductions, 18% have one suspicious deduction, and that the remainder have no suspicious deductions. The auditor has also determined that, historically, 5% of the returns of self-employed individuals contain significant fraud. The auditor has begun his evaluation of a tax return for a self-employed individual that contains one suspicious expense deduction.
a. Determine the probability that the return being audited contains significant fraud.

It seems really easy but I am stuck.
internal revenue audit

Best answer:

Answer by GMan
0% per the US Justice Dept. In order to prove fraud you need to prove willfulness and intent to defraud which is rarely if ever provable in court.

100% per my knowledge of my self employed friends. The self employed will cheat at every opportunity to maximize profits.

3% per your math quiz.