Conduct Subject to Sanction Flashcards
When can a practitioner be disciplined?
The Secretary of the Treasury or a delegate can punish a tax practitioner for misconduct after giving notice and holding a hearing.
What are the types of punishment for tax practitioners?
Types of punishment include:
• Censure: A public reprimand.
• Suspension: Temporary loss of the right to practice before the IRS.
• Disbarment: Permanent loss of the right to practice before the IRS (can apply for reinstatement after 5 years).
Can monetary penalties be imposed on tax practitioners?
Yes, a monetary penalty can be imposed on the individual, their firm, or both, up to the amount of income earned from the misconduct.
What are common reasons for punishing a practitioner?
A practitioner may be punished for:
1. Being incompetent or disreputable.
2. Violating the rules in Circular 230.
3. Misleading or threatening clients on purpose.
What is a ‘soft letter’ from the IRS?
The IRS may issue a private reprimand or a warning letter (called a ‘soft letter’) instead of formal discipline if the issue is minor.
What constitutes ‘incompetence’ or ‘disreputable conduct’?
Examples of misconduct include:
1. Criminal Convictions: Violations of tax laws, crimes involving dishonesty, felonies.
2. Dishonest Behavior: Giving false information, misleading clients.
3. Tax-Related Misconduct: Not filing taxes, helping clients evade taxes.
4. Improper Influence: Threatening or bribing IRS employees.
5. Professional Failures: Being disbarred in another profession, giving false advice.
6. Other Violations: Abusive language, failing to sign returns, practicing without a valid PTIN.
What are violations of Circular 230?
Practitioners can be punished for:
1. Willfully breaking IRS regulations.
2. Acting recklessly or showing gross incompetence, such as ignoring Circular 230’s standards.
What are the responsibilities of firm leaders regarding Circular 230?
Firm leaders must:
• Set up systems to ensure compliance with Circular 230.
• Take action if someone in the firm is violating the rules.
What happens if firm leaders fail to ensure compliance?
If firm leaders fail to ensure compliance, they can also face punishment.
