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Tax preparers can be investigated and subject to sanctions by the IRS’s Office of Professional Responsibility (OPR) if the agency believes that the tax preparer has violated the standards of professional conduct for practicing before the government entity. Tax professionals, including CPAs, appraisers, attorneys and enrolled agents are all potentially subject to IRS investigations if they are suspected of violating any of the many rules and regulations found in Circular 230.

If you come under investigation by the OPR, it is important to reach out to a tax attorney right away to find out what options you have available to you for fighting the accusations and trying to avoid penalties that could include suspension or disbarment of your ability to practice before the IRS, public censure, monetary penalties and referral for criminal prosecution. It is also important to know what could trigger an OPR investigation into a tax preparer in the first place so you can attempt to avoid the kind of misconduct that could prompt the OPR to begin looking into your actions.

What Triggers an IRS OPR Investigation of Tax Preparers?

The OPR, an agency that investigates professional licenses, will look into a tax preparer if it has reason to believe the tax professional has violated any of the body of regulations that have been collected in Circular 230. These regulations relate to everything from responding to IRS requests for information, to the way in which tax preparers communicate with clients and conduct their due diligence, to ensuring clients are not submitting false information to the IRS.

Among the several types of conduct that may prompt the OPR to begin an investigation on a tax preparer include:

• A tax preparer promoting abusive tax shelters
• Allegations of professional malpractice made against a tax preparer
• Knowing submission of false tax returns
• Refusal to comply with IRS requests for information
• Intentionally delaying IRS proceedings

A tax preparer's misconduct can also be discovered as a result of an audit into the tax returns of the preparer's clients. For example, 9 News reported recently that a tax preparer was sentenced to 21 months of imprisonment for assisting clients in preparing and submitting false tax returns. The preparer was found to have filed at least 34 false tax returns over a period of 2008 to 2012.

The returns were filed for 16 different clients and caused as much as $133,000 in lost revenue to the government. When the submitted returns were audited, the IRS discovered the taxpayers had obtained refunds they shouldn't have by deducting expenses they didn’t pay. The IRS received multiple complaints from clients, which led them to the tax preparer.

In this case, criminal action was taken against the preparer. However, even when a tax preparer does not face criminal penalties and jail time, sanctions imposed by the OPR can effectively put a career on hold or end a career.

Accusations of wrongdoing must be taken seriously and any preparer who is concerned about an IRS investigation should contact Thorn Law Group as soon as possible. Kevin E. Thorn, Managing Partner of Thorn Law Group, is the only former IRS OPR attorney currently in private practice. His unique insight and invaluable knowledge can help you beat your OPR investigation and avoid serious penalties.