A practitioner who never signs a single return can still be disbarred. The Office of Professional Responsibility reaches supervisors, ghost preparers, and anyone who helps a taxpayer file garbage.
Several IRS offices deal with tax professionals, each with a different job. When a practitioner may need discipline for disreputable conduct or another Circular 230 violation, the office in charge is the Office of Professional Responsibility (OPR). It administers the discipline provisions of Treasury Department Circular No. 230 (31 CFR Part 10), the rules for practice before the IRS, and it has exclusive responsibility for practitioner conduct and discipline.
Three enforcement bodies get confused on the exam:
In a firm, many returns go out that the person in charge never touches. Circular 230 section 10.36 makes that person answerable for how the whole practice complies, not only for the work they sign. It assigns practitioner supervisory responsibilities to any individual with principal authority and responsibility for a firm's federal tax practice.
Common mistakes
- Treating suspension as unlimited. Suspension runs 1 to 59 months. Candidates often pick "60 months" or "indefinite," but 60 months would collide with the 5-year disbarment reinstatement floor.
- Capping the monetary penalty at a flat figure. There is no fixed dollar cap. The ceiling is the gross income derived from the conduct ($9,400 in Example 1), and the firm can be assessed separately.
- Applying section 6702 only when tax is owed. The $5,000 frivolous return penalty applies even to a zero-tax return, and joint filers can each be hit, for $10,000 total.
Bottom line
- OPR sanctions: censure (public reprimand), suspension of 1 to 59 months, disbarment with a 5-year reinstatement floor, and a monetary penalty capped at gross income derived from the conduct.
- Section 10.36 makes the individual with principal authority over a firm's federal tax practice liable for absent procedures, unfollowed procedures, or an ignored pattern of noncompliance.
- Sanctions require willfulness, recklessness, or gross incompetence; ordinary negligence is not sanctionable.
- Section 10.51 disreputable conduct includes tax crimes, misappropriating client tax payments, failing to file one's own returns, aiding a suspended person, threatening IRS employees, and state-level disbarment.
Exam shortcut
Read the stem for the actor first. If it names a firm's practice leader, go straight to 10.36 and ask three questions in order: were there procedures, were they followed, was there a known pattern. Any "no" is a violation, and the signature line is a distractor. For sanction questions, count the months. Anything 59 or below is suspension; 5 years and up is disbarment territory.
The full lesson (about 3,717 words, 25 min read) adds 2 worked examples, all 6 common mistakes, a self-check, free in the app.
Learning objectives
- 1A
- 1B
- 1C
- 2
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