What distinguishes surveillance from a tax audit?

• A. Surveillance is a formal examination; tax audit is a preliminary detection.
• B. Surveillance is a prevention program that does not involve records.
• C. Surveillance is a preliminary detection; tax audit is a formal examination requiring a Letter of Authority.
• D. Surveillance only targets banks.

Answer: (C)

The main idea here is that surveillance and a tax audit serve different purposes and operate under different levels of authority. Surveillance is used as an initial detection step to identify potential noncompliance. It involves monitoring, data analysis, and risk-based screening to flag unusual patterns, but it doesn’t involve a formal, case-specific examination or legal authorization. A tax audit, on the other hand, is a formal, sanctioned review of a taxpayer’s records to verify tax liability, and it requires an official instrument like a Letter of Authority that defines the scope and period of the audit. That combination—preliminary detection versus formal examination with authorization—is what distinguishes the two. The idea that surveillance is a formal examination, or that it’s a prevention program without records, or that it only targets banks, doesn’t fit how surveillance and audits actually function.