Practices and Procedures · Sanctionable acts

Sanctions imposed by the Office of Professional Responsibility

Circular 230 sanctions are not a single scale with a dial. They differ in who imposes them, what has to be proved, whether the practitioner may keep working, and how the practitioner gets back. Two of the five never reach an Administrative Law Judge at all. Getting the sanctions in the right order is worth less than knowing which door each one comes through.

The rule

What may be imposed. After notice and an opportunity for a proceeding, the Secretary of the Treasury or delegate may censure, suspend or disbar a practitioner (Circular 230 § 10.50(a)); may disqualify an appraiser (§ 10.50(b)); and may impose a monetary penalty on a practitioner whose conduct is sanctionable under § 10.50(a), and on the practitioner’s employer, firm or entity if it knew or reasonably should have known of the conduct (§ 10.50(c)(1)).

Censure is a public reprimand (§ 10.50(a)). It is not the same thing as the informal reprimand in § 10.60(a), which is an alternative to instituting a proceeding at all.

The monetary penalty is capped by the fee, not by a schedule. It may be not more than the gross income derived, or to be derived, from the conduct giving rise to the penalty^TY2026 (§ 10.50(c)(2)), and it may be imposed in addition to or in lieu of suspension, disbarment or censure, and in addition to a penalty on the firm (§ 10.50(c)(3)).

Pre-proceeding notice is required. Except under the expedited route, a proceeding will not be instituted unless the proposed respondent has first been advised in writing of the law, facts and conduct warranting it, and given an opportunity to dispute facts, assert additional facts, and make arguments including mitigation (§ 10.60(c)).

Consent in lieu of proceeding. A practitioner may offer a consent to be sanctioned rather than have a proceeding instituted or continued (§ 10.50(d); § 10.61(b)(1)). The Commissioner may accept, decline, indicate what different terms would be accepted, or counteroffer (§ 10.61(b)(2)).

The complaint. If no agreement is reached, a complaint issues. It must name the respondent, give a clear and concise description of the facts and law, be signed by an authorised IRS representative, specify the sanction sought — and, if suspension, its duration — and demand an answer within not less than 30 days from service of the complaint^TY2026, warning that default may be entered (§ 10.62(a)–(c)).

The standard of proof splits with the sanction. It is preponderance of the evidence for censure or suspension under six months; clear and convincing evidence for a monetary penalty, disbarment, or suspension of six months or longer^TY2026 (§ 10.76(b)). Appraiser disqualification requires clear and convincing evidence.

The decision and its review. The Administrative Law Judge should decide within 180 days after the hearing closes and proposed findings are received^TY2026 and orders censure, suspension, disbarment, monetary penalty, disqualification, or dismissal (§ 10.76(a)(1)). Either party may appeal within 30 days from service of the Administrative Law Judge decision^TY2026 (§ 10.77(a), (b)). On appeal the Secretary or delegate makes the agency decision, ordinarily within 180 days after receipt of the appeal^TY2026, and will not reverse unless the decision is clearly erroneous on the record and the law — though pure questions of law are reviewed de novo (§ 10.78(a), (b)).

What each sanction does. Disbarment bars practice until the IRS authorises it again under § 10.81 (§ 10.79(a)). Suspension bars practice for its period (§ 10.79(b)). Censure leaves the practitioner able to practise (§ 10.79(c)). After either suspension or censure, future representations are subject to specified conditions for a reasonable period in light of the gravity of the violations (§ 10.79(d)).

Reinstatement. A practitioner disbarred or suspended may petition after 5 years after disbarment, suspension or disqualification, or immediately after a shorter period expires^TY2026, and it is granted only if the IRS is satisfied the petitioner is not likely to offend again and that reinstatement is not contrary to the public interest (§ 10.81(a)).

Expedited suspension. Where the practitioner falls in a listed class — a licence suspended or revoked for cause, a conviction under title 26 or for dishonesty or breach of trust or a disqualifying felony, violation of § 10.79(d) conditions, a court sanction for delay or frivolous arguments, or a pattern of non-filing — a show cause order may issue under § 10.82 instead of the ordinary route (§ 10.82(a), (b)). The classes are limited to conduct within the 5 years before the show cause order is served^TY2026, and the non-filing pattern means no annual return in 4 of the 5 preceding tax years, or no more-frequent return in 5 of the 7 preceding tax periods, and still noncompliant when the suspension notice issues^TY2026 (§ 10.82(b)(5)).

Current figures

How it works in practice

The split standard of proof in § 10.76(b) is the most consequential rule on this page and the one most often stated wrongly. It is not “clear and convincing evidence” across the board. Censure and a suspension of under six months need only a preponderance. The heavier sanctions — monetary penalty, disbarment, suspension of six months or more — need clear and convincing evidence. The government therefore has a real incentive to seek a five-month suspension rather than a seven-month one, and the complaint must specify the duration sought (§ 10.62(b)), so the respondent knows from the pleading which standard is in play.

The informal reprimand and censure are different animals despite the confusing language. Section 10.60(a) lets the IRS reprimand a practitioner instead of instituting a proceeding — a private letter, no ALJ, no public record. Censure under § 10.50(a) is expressly “a public reprimand”, is an outcome of a proceeding or an accepted consent, and OPR publishes it. The IRS publishes censures, suspensions and disbarments in the Internal Revenue Bulletin — most recently Announcement 2026-13 in IRB 2026-32 — and § 10.80 additionally requires notice to IRS officers and employees and interested federal agencies, with discretion to notify the practitioner’s state licensing authority.

The monetary penalty is the sanction practitioners underrate. It has no fixed schedule; it runs to the gross income derived from the conduct, which on a large engagement is a serious number, and it stacks. A firm that knew or should have known can be penalised alongside the individual, and the penalty can accompany a suspension rather than replace it.

Expedited suspension is a shortcut and is treated as one. The § 10.60(c) pre-proceeding notice requirement is expressly disapplied for it. The route exists because the listed classes involve facts already established elsewhere — a conviction, a state revocation, a court sanction — so there is nothing for the ordinary process to find.

How this has changed

Most of subpart D in its present form comes from T.D. 9527 (76 FR 32309–32311, 3 June 2011), applicable from 2 August 2011, which rewrote the complaint, decision, effect-of-sanction and expedited suspension provisions. Section 10.81 is later still: T.D. 9668 (79 FR 33694) replaced it effective 12 June 2014, adding the alternative of petitioning immediately when the suspension or disqualification period is shorter than five years — before that, the five-year wait applied regardless. The monetary penalty in § 10.50(c) is the oldest layer here, applying to prohibited conduct after 22 October 2004.

Exam focus

The five sanctions and who bears them: censure, suspension and disbarment for practitioners; disqualification for appraisers; monetary penalty for practitioners and, on a knowledge test, their firms. Learn § 10.76(b)‘s split standard of proof and the six-month line that triggers it. Know that censure leaves practice rights intact, that disbarment requires reinstatement under § 10.81, and that the monetary penalty ceiling is the gross income derived from the conduct. Expect a question distinguishing a private reprimand from a public censure, and one on when the expedited route under § 10.82 is available.

Check yourself

1. OPR seeks a nine-month suspension. The allegations of fact necessary to a finding against the practitioner must be proven: (A) By a preponderance of the evidence (B) By clear and convincing evidence (C) Beyond a reasonable doubt (D) By substantial evidence Answer: B. Section 10.76(b) applies the clear and convincing standard to suspensions of six months or longer.

2. The maximum monetary penalty under Circular 230 is: (A) $5,000 per violation (B) The gross income derived, or to be derived, from the conduct giving rise to the penalty (C) 50 percent of the fee (D) Set annually by revenue procedure Answer: B. Section 10.50(c)(2).

3. A practitioner is censured. The practitioner: (A) May not practise before the IRS until reinstated (B) May continue to practise, subject to conditions the IRS may impose (C) Is suspended for six months automatically (D) Must re-sit the enrolled agent examination Answer: B. Sections 10.79(c) and 10.79(d).

4. Which is true of a reprimand under § 10.60(a)? (A) It is the same as censure and is published (B) It is an alternative to instituting a proceeding and is not a § 10.50 sanction (C) It requires an Administrative Law Judge decision (D) It bars practice for one year Answer: B.

5. A practitioner is disbarred. The earliest a petition for reinstatement may be made is: (A) Immediately (B) One year later (C) Five years later (D) Never Answer: C. Section 10.81(a); the shorter-period alternative applies to suspension and disqualification, not disbarment.