Volunteer Income Tax Assistance (VITA) Certification Practice Test

What action should be taken if a taxpayer provides conflicting information?

1. Prepare the return with the information given

2. Clarify with the taxpayer for correct information

3. Notify the IRS of the conflict

4. Ignore and move forward with filing

The correct answer is: Clarify with the taxpayer for correct information

When a taxpayer provides conflicting information, the best course of action is to clarify with the taxpayer for correct information. This ensures that the tax return is accurate and reflects the taxpayer’s actual financial situation. Resolving discrepancies before filing can prevent errors that could lead to complications, such as audits or penalties. It's crucial for tax preparers to engage the taxpayer in discussions to determine which details are correct, ensuring adherence to tax laws and optimizing the taxpayer’s return. This proactive approach fosters trust and demonstrates a commitment to accuracy. Taking the alternative actions could lead to various complications. For example, preparing the return as per the conflicting information without verification may result in erroneous filings, potential legal consequences, or a less favorable tax outcome for the taxpayer. Notifying the IRS of the conflict without first attempting to resolve it with the taxpayer would be inappropriate, as it does not facilitate an accurate resolution. Ignoring the conflict entirely could lead to severe repercussions, including fines or audits, which are detrimental to both the taxpayer and the preparer's credibility. Therefore, clarifying with the taxpayer is essential for an accurate and compliant tax return.