Overview of Circular 230 Disciplinary Proceedings
The Office of Professional Responsibility (OPR) administers and enforces the regulations governing practice before the IRS. In very general terms, individuals who are eligible to "practice" are eligible to represent taxpayers before the IRS. The regulations governing practice are set out in title 31, Code of Federal Regulations, part 10, and are published in pamphlet form as Treasury Department Circular No. 230. The enabling legislation for the Circular 230 regulations appears in title 31, United States Code, section 330.
As explained below, under Circular 230 OPR is responsible for instituting two types of disciplinary proceedings. OPR makes certain information from those proceedings publically available.
Those subject to Circular 230 disciplinary proceedings may be represented. A representative's first contact with OPR should be the submission of a writing that confirms the representative's status (Form 2848 is acceptable).
Section 10.60 disciplinary proceedings
These proceedings apply to:
"Practitioners," which is Circular 230's collective term for individuals who are eligible to practice before the IRS: attorneys, certified public accountants, enrolled agents, enrolled actuaries, and enrolled retirement plan agents. Practitioners who fail to comply with any of Circular 230's regulations are subject to the sanctions of private reprimand, public censure, suspension or disbarment from practice before the IRS, and imposition of a monetary penalty.
Appraisers, who are individuals who present evidence or testimony in administrative proceedings before the IRS or the Department of the Treasury. Appraisers who violate applicable Circular 230's rules are subject to disqualification from presenting testimony or evidence.
Employers, firms, and other entities which knew or should have known that a practitioner acting on their behalf engaged in misconduct subject to discipline under Circular 230 are subject to a monetary penalty.
Note re tax return preparers: Treasury expects to amend Circular 230 to apply to the preparation of tax returns and tax return preparers, thereby expanding OPR's jurisdiction over practitioner conduct. See IRS Publication 4832, Return Preparer Review (Rev. 12-2009). Currently, a tax return preparer who engages in limited practice as permitted by Circular 230, section 10.7(c)(1)(viii), is subject to applicable rules of Circular 230.
The discussion below focuses on practitioners but is generally applicable to all section 10.60 disciplinary proceedings.
Informal, pre-proceeding stage – notice of possible violations, conference, and negotiation. Circular 230 requires OPR, prior to the issuance of a complaint instituting a formal disciplinary proceeding, to give the practitioner written notice of the law, facts, and conduct warranting such action. Circular 230 also requires OPR to accord the practitioner an opportunity to dispute facts, assert additional facts, and make arguments, including an explanation or description of mitigating circumstances. Upon receipt of OPR's notice, usually referred to as an "allegation letter, the practitioner may submit a written response, may request a conference, or both. If OPR finds the practitioner's response insufficient, Circular 230 authorizes OPR to accept the practitioner's offer of consent to a sanction in settlement of the disciplinary matter.
In early 2010, OPR's new Director, Karen L. Hawkins, introduced innovations to the informal, pre-proceeding stage, which are designed to give practitioners earlier notice of possible misconduct, to resolve disciplinary matters more expeditiously, and to improve future compliance.
Currently, if OPR is conducting an investigation in a "conduct" case, i.e., possible misconduct other than tax non-compliance, OPR's first contact with a practitioner is not the traditional allegation letter, but rather a "pre-allegation notice letter," which notifies the practitioner of the investigation and invites the practitioner to submit any relevant information. If the practitioner's information does not resolve the matter, OPR sends an allegation letter specifying suspected violations of Circular 230. The practitioner may submit an additional response and may request a conference to be conducted in OPR's Washington, DC, office or by telephone.
If these actions do not revolve the matter, OPR may suggest that the practitioner offer a consent to censure, suspension, or disbarment in settlement of the matter. OPR may accept the offered consent or may open settlement negotiations with the practitioner. In some cases, OPR will conclude the matter by reprimanding the practitioner.
Ms. Hawkins' innovations include alternate disciplinary approaches for the informal, pre-proceeding stage. One new approach applies when the practitioner has been referred to OPR for tax non-compliance, i.e., failure to meet his or her Federal tax responsibilities, but has self-corrected before OPR's contact. In that situation, OPR's first contact with the practitioner will be a letter of reprimand acknowledging the practitioner's self-correction and admonishing the practitioner to remain compliant in the future. A second new approach applies when the practitioner's tax non-compliance involves a balance due or unfiled tax returns. In that situation, OPR will send the practitioner a reprimand that calls for the practitioner to come into compliance within 60 days or face a more severe sanction.
Pursuant to a third alternative approach involving both tax non-compliance cases and conduct cases, when the practitioner's appearances before the IRS have been infrequent or nominal and the practitioner has expressed an intention to refrain from practice in the future, OPR will consider the practitioner's offer of a deferred disciplinary agreement whereby a consent sanction will become effective only in the event of the practitioner's continued misconduct.
Formal proceeding stage – service of complaint, respondent's answer, evidentiary hearing, ALJ's decision. If a disciplinary matter is not resolved at the informal, pre-proceeding stage, OPR refers the matter to the Office of the Associate Chief Counsel (General Legal Services) ("GLS"), which will represent OPR in formal disciplinary proceedings conducted before an administrative law judge ("ALJ"). GLS will give the practitioner an additional opportunity to offer an acceptable consent to sanction, and if such an offer is not forthcoming, GLS will serve the practitioner with a complaint containing a statement of the facts and law constituting the basis for the proceeding. The practitioner must file an answer within the time specified in the complaint unless the practitioner receives the ALJ's approval to extend the time. If the practitioner fails to file a timely answer, the ALJ may issue a default decision against the practitioner without a hearing. After the filing of the complaint, either party may file motions with the ALJ, including a motion for discovery.
In the absence of a settlement, the matter will progress to an evidentiary hearing presided over by the ALJ. The location of the hearing will be determined by agreement between the practitioner and OPR with the approval of the ALJ, but in the absence of agreement and approval, the hearing will be held in Washington, DC. Hearings are stenographically recorded and transcribed. The testimony of witnesses is taken under oath or affirmation. Within 180 days of the conclusion of the hearing, the ALJ will issue a decision containing findings and conclusions, as well as an order of censure, suspension, disbarment, or monetary penalty against the practitioner, disqualification of an appraiser, or dismissal of the complaint. In the absence of an appeal to the Secretary of the Treasury, the decision of the ALJ becomes the final agency decision after 30 days.
Appeal stage – objections to the ALJ's decision. Within 30 of the date of the ALJ's decision, the practitioner, OPR, or both may file an appeal, which must be supported by a brief stating the objections to the ALJ's decision. If the practitioner appeals, the appeal should be sent to OPR, which will furnish a copy to the Secretary's delegate ("Appellate Authority"), who decides appeals. If OPR appeals, OPR will send a copy of the appeal to the practitioner. The Secretary's delegate will make the final agency decision and furnish copies to the practitioner and OPR. Upon
Section 10.82 disciplinary proceedings for expedited suspension
These proceedings apply to:
Practitioners (see above) who within five years:
Have had a license to practice as an attorney, CPA, or actuary suspended or revoked for cause;
Have been convicted of any crime under title 26, United States Code, i.e., the Internal Revenue Code, any crime involving dishonesty or breach of trust, or any felony involving conduct that renders the practitioner unfit to practice before the IRS;
After being subject to the sanction of censure or suspension, have violated conditions imposed by OPR on their future representations; or
Have been sanctioned by a court in a civil or criminal proceeding, including suits for injunctive relief, relating to any taxpayer's tax liability or relating to the practitioner's own tax liability for instituting or maintaining proceedings primarily for delay, advancing frivolous or groundless arguments, or failing to pursue available administrative remedies.
Formal proceeding stage – service of complaint, respondent's answer, conference, expedited suspension. Because section 10.82 proceedings are based on prior final adjudications in judicial or administrative proceedings, there is no informal stage. Rather, OPR's first contact with the practitioner consists of a complaint stating the allegations constituting the basis for the expedited proceeding. Within 30 calendar days after the complaint is served, the practitioner must file an answer, and if the practitioner intends to request a conference, it must be requested in the answer. If the answer is not timely filed, OPR may issue a default decision suspending the practitioner from practice before the IRS.
A conference may be conducted in OPR's Washington, DC, office or by telephone. Following a conference, upon a finding that any of the section 10.82 criteria (license suspension or revocation, criminal conviction, etc.) apply to the practitioner, OPR may issue a decision suspending the practitioner. The suspension will remain in effect until OPR lifts the suspension after determining that the section 10.82 criteria no longer apply to the practitioner, or the suspension is lifted by an ALJ in a section 10.60 proceeding.
Section 10.60 proceeding stage. If OPR suspends a practitioner, the practitioner may ask OPR to issue a complaint under section 10.60. The request must be made in writing within two years from the effective date of the expedited suspension. OPR must issue the complaint within 30 calendar days of receiving the request.
Publically available information
Announcements of disciplinary sanctions. These announcements, which appear in the Internal Revenue Bulletin, list: name; city and state, professional designation; disciplinary sanction (e.g., censure, expedited suspension, along with a brief description of the grounds for sanction); and effective dates. A sanction is included in the announcements when: (1) an ALJ or the Secretary's delegate on appeal has issued a final agency decision; (2) a disciplinary matter is concluded with a signed "consent to sanction," which must include one or more admitted violations of the regulations; or (3) OPR has issued a decision in an expedited proceeding for suspension. For a list of IRB issues containing announcements, see Announcements of Disciplinary Sanctions.
Final agency decisions. Final agency decisions in Circular 230 disciplinary proceedings (unappealed ALJ decisions or decisions of the Appellate Authority), with identifying information of third party taxpayers redacted, can be accessed at Final Agency Decisions in Disciplinary Cases.