Practitioner Actions Resulting in Referrals to OPR

IRS recently revised portions of the Internal Revenue Manual (IRM) dealing with return preparers (IRM 4.1.10.1.1).  The updated information provides insight on when tax preparer misconduct might trigger a referral to the Office of Professional Responsibility (OPR).  It also provides guidance to IRS employees as to when a referral is discretionary or mandatory.

The Office of Professional Responsibility (OPR) is charged with administering and enforcing the regulations governing practice before the IRS, as detailed in Circular 230, Regulations Governing the Practice of Attorneys, Certified Public Accountants, Enrolled Agents, Enrolled Actuaries, and Appraisers before the Internal Revenue Service.

OPR investigates allegations of disreputable conduct and incompetence involving Attorneys, Certified Public Accountants, Enrolled Agents, Enrolled Actuaries and Appraisers.  Circular 230 provides for a range of formal and informal sanctions.  The most serious sanctions are suspension or disbarment from representation of taxpayers before the IRS.

Discretionary Referrals - Examples of conduct which would warrant a referral to OPR may include the following:

A. Failure to exercise due diligence (Cir 230 § 10.22(a)).

B. Conviction of any criminal offense under the revenue laws of the United States (Cir 230 §10.51(a)).

C. Conviction of any criminal offense involving dishonesty or breach of trust (Cir 230 § 10.51(b)).

D. Conviction of any felony under Federal or State law for which the conduct involved renders the practitioner unfit to practice before the IRS (Cir 230 § 10.51(c)).

E. Giving false or misleading information or participating in any way in the giving of false or misleading information in connection with any matter pending or likely to be pending before the IRS (Cir 230 § 10.51(d)).

F. Willfully failing to file a Federal tax return or evading the assessment of any Federal tax or knowingly counseling or suggesting to a client or prospective client an illegal plan to evade Federal taxes or payment thereof (Cir 230 § 10.51(f)).

G. Disbarment or suspension from practice as an attorney, certified public accountant, public accountant, or actuary (Cir 230 § 10.51(i)).

H. Giving a false opinion, knowingly, recklessly, or through gross incompetence, including an opinion which is intentionally or recklessly misleading, or engaging in a pattern of providing incompetent opinions on questions arising under the Federal tax laws (Cir 230 § 10.51(l)).

I. Contemptuous Conduct, such as threats, yelling, abusive language or any other inappropriate conduct (Cir 230 § 10.51(k)).

J. Assertion of penalties under IRC 6694, IRC 6695, IRC 6700 and IRC 6701.

Mandatory Referrals - Referral of enrolled practitioners to OPR is mandatory in the following situatios per IRM 4.11.55.4.2.2.1, Situations Requiring a Mandatory Referral.

A. When understatement due to unreasonable positions (IRC 6694(a)) penalties are assessed and closed agreed, sustained in Appeals, or closed unagreed without Appeals contact.

B. When understatement due to willful or reckless conduct (IRC 6694(b)) penalties are assessed and closed agreed, sustained in Appeals, or closed unagreed without Appeals contact.

C. Anytime a penalty for negotiation of a refund check (IRC 6694(f)) is assessed.

D. Anytime a penalty for aiding and abetting (IRC 6701) is assessed.  In addition, referrals should be considered where the IRC 6701 penalty was considered but not imposed.

E. Anytime a penalty for promoting abusive tax shelters (IRC 6700) is assessed.

F. Anytime injunctive action under IRC 7407 or IRC 7408 is pursued. 

  • Lee Reams Sr.

  • Lee T. Reams is the Chief Technical Officer of ClientWhys. He is also an Enrolled Agent having managed a 600-plus client tax practice. Educated as an engineer, with a Bachelor's Degree in Mechanical Engineering, Lee left his engineering career in 1975 to expand his part-time tax practice into a full-time career.

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