Avoiding The Imposition Of Penalties And Sanctions Under Circular 230 On Tax Practitioners

Abstract

The Treasury Department and the IRS have established certain standards for those who are tax practitioners. Certified Public Accountants and other tax practitioners face potential penalties if they violate those standards.  “Treasury Department Circular No. 230” contains the rules that guide practitioners. It also specifies a number of tax preparer penalties and sanctions that can be imposed on those who “practice before the IRS.” Sanctions can include censure, suspension, disbarment, and the assessment of monetary penalties. The imposition of these sanctions can have a significant negative impact on a CPA’s practice. The CPA firm’s reputation and its ability to generate income can be adversely affected. The purpose of this article is to summarize the penalties and sanctions contained in Treasury Circular 230.  The article also recommends courses of action that tax practitioners should take in order to minimize their exposure to those sanctions.