What action could lead to your user incurring IRS fines or penalties?

The correct answer is that not reporting a Taxpayer ID (TIN) could lead to a user incurring IRS fines or penalties. The TIN is a crucial piece of information for the IRS as it helps to identify taxpayers and ensure accurate processing of tax information. If a user fails to report their TIN when required, it can create issues with their tax filings. The IRS may impose penalties for not providing essential tax information, as it complicates their ability to track income and assess tax liabilities accurately.

When individuals or businesses do not report their TIN, the IRS might not have the necessary data to link income reports to the corresponding taxpayer, potentially leading to incorrect assessments and adherence issues. As a result, failing to report a TIN can lead to fines, because it violates the regulatory requirements established by the IRS for tax reporting and compliance.

In contrast, reporting an incorrect TIN is also problematic, but the question specifically asks about the action that would likely result in IRS penalties or fines directly, which is more severe in the case of not reporting the TIN at all. Completing tax returns accurately and filing for extensions are actions aligned with compliance and generally do not incur penalties if handled correctly.