We examine if, in a finite horizon problem, audit policies should be conditioned on the auditing status of the taxpayers or not. For a two period model with discrete income levels, we characterize the solution and establish conditions under which a state-dependent audit policy is optimal. We then examine the case where the income levels are distributed continuously over an interval, and it is optimal to induce truthful reporting in the one-period problem. In this set-up we show that there always exists a state-dependent audit policy that payoff dominates a simple repetition of the one period policy. From a policy point of view, however, this result must be applied circumspectly.