• The IRS doesn't actually use a lottery system to decide who to audit. (Or are you asking how many lottery winners the IRS picks to audit?) The IRS uses a profiling technique to flag returns that they might want to audit. They have certain parameters that are programmed into their computers and any return that meets those parameters are flagged. I don't know how they pick which of these to audit. I do know that things like starting a business or taking home office deductions make your return more likely to be flagged for a potential audit. Overall, only about 2% of all returns are audited. As for lottery winners, I wouldn't think the IRS would audit them just because they won the lottery. The lotteries themselves are scrupulous about withholding, so unless the winner filed a return with the kind of deductions that arouse the IRS's interest, I don't think they'd be any more likely to be audited.

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