Circular 230 establishes the procedures the IRS uses to discipline practitioners who violate professional standards. The Office of Professional Responsibility (OPR) administers these proceedings and may reprimand, censure, suspend, or disbar a practitioner after notice and an opportunity for a hearing. (“Whenever the Director… determines a practitioner violated… may reprimand… or institute a proceeding…”)
Initiating a Proceeding
OPR begins a disciplinary action by filing a complaint. Except in unusual circumstances, OPR first provides written notice of the facts and gives the practitioner an opportunity to correct or explain the issue before formal action begins. (“The director will not institute a proceeding… until the facts… have been given in writing…”)
A practitioner may also consent to a sanction instead of proceeding to a hearing.
Conferences
OPR may meet with a practitioner at any time to discuss allegations. If the practitioner and OPR reach a stipulation, it may be entered into the record. (“The Director… may confer… irrespective of whether a proceeding has been instituted.”)
Contents of a Complaint
A valid complaint must include:
- Charges
A clear description of the facts and law supporting the action.
- Specification of Sanction
The sanction OPR seeks (censure, suspension, disbarment, monetary penalty).
- Demand for Answer
The complaint must notify the respondent of:
- Time to answer (minimum 30 days)
- Name/address of the Administrative Law Judge (ALJ)
- Name/address of OPR’s representative
- Warning that failure to answer may result in default (“The complaint must notify the respondent… that a decision by default may be rendered…”)
Service may be by hand delivery, business drop‑off, or certified/first‑class mail.
Answer and Default
The respondent must file a written answer with the ALJ and serve OPR. General denials are not allowed. Each allegation must be admitted, denied, or stated as lacking sufficient information. (“General denials are not permitted.”)
Failure to answer results in:
- Admission of all allegations
- Waiver of hearing
- Default decision (“Failure to file an answer… constitutes an admission of guilt…”)
Supplemental Charges
OPR may amend the complaint if the respondent:
- Falsely denies material facts in bad faith
- Introduces false testimony (“The Director… may amend the complaint… to file supplemental charges…”)
Reply, Proof, Motions
OPR may reply to the answer but is not required to. The ALJ may amend pleadings to conform to evidence and must allow time for response. Any party may file motions, and the ALJ issues written rulings. (“Any party may file a motion… ALJ should issue written orders…”)
Role of the Administrative Law Judge
The ALJ conducts the proceeding and has authority to:
- Administer oaths
- Rule on motions
- Set hearing dates
- Regulate procedure
- Receive evidence
- Examine witnesses
- Authorize depositions
- Hold settlement conferences
- Issue decisions (“The ALJ has the authority… to make decisions.”)
Discovery
Discovery is allowed only at the ALJ’s discretion and requires a written motion showing relevance and reasonableness. (“The ALJ may permit discovery… only upon written motion…”)
Hearings
Hearings must occur within 180 days of the answer unless justice requires otherwise. Respondents may appear personally or through a practitioner or attorney. (“The hearing must occur within 180 days…”)
Evidence and Transcript
Formal rules of evidence do not apply. The ALJ may exclude irrelevant or repetitive material. IRS and OPR records are always admissible. Transcripts and evidence copies must be provided upon request. (“The rules of evidence… are not controlling…”)
Proposed Findings and Conclusions
Both parties may submit proposed findings unless the case is in default or a party fails to appear. (“The parties must have a reasonable opportunity to submit proposed findings…”)
ALJ Decisions
Timing
The ALJ must issue a decision within 180 days after the hearing concludes.
Contents
The decision must include:
- Findings of fact
- Conclusions of law
- Basis for the decision
- Order of sanction or dismissal
Summary Adjudication
If requested, the ALJ must rule within 60–90 days depending on responses.
Standard of Proof
- Preponderance of evidence for censure or suspensions under 6 months
- Clear and convincing evidence for monetary penalties, disbarment, or suspensions of 6+ months (“If the sanction is… fewer than six months… preponderance… if… six months or longer… clear and convincing evidence.”)
Finality
If no appeal is filed within 30 days, the ALJ’s decision becomes final. (“The decision… will become the decision of the agency 30 days after…”)
Appeals
Any party may appeal to the Secretary of the Treasury (or delegate). The appeal must be filed within 30 days and include a brief stating exceptions. The Secretary should issue a decision within 180 days. (“Any party… may file an appeal… within 30 days…”)
Sanctions and Notice
The Secretary may censure, suspend, or disbar a practitioner for incompetence, disreputable conduct, or willful violations. OPR may notify IRS personnel, federal agencies, and state licensing authorities of final sanctions. (“The Director… may give notice… to appropriate officers…”)
Petition for Reinstatement
A disbarred practitioner or disqualified appraiser may petition for reinstatement after five years. Reinstatement requires proof that future compliance is likely and that reinstatement is not contrary to the public interest. (“Reinstatement will not be granted unless… not likely to engage… contrary to the public interest.”)
Expedited Suspension
OPR may expedite suspension when a practitioner has:
- Had a professional license revoked
- Been convicted of a tax‑related crime or felony involving dishonesty
- Violated conditions of prior sanctions
- Been sanctioned by a court for frivolous or abusive conduct (“The Director… may expedite… when the practitioner has… been convicted… sanctioned by a court…”)
The complaint must notify the respondent of:
- Answer deadline
- Default consequences
- Right to request a conference
- Possibility of immediate suspension (“The complaint must notify the respondent… that a decision by default may be rendered…”)
Failure to answer results in immediate suspension.