The Internal Revenue Service’s Office of Professional Responsibility (OPR) recently issued an OPR Alert, "Fessing Up Can Be in Your Own Best Interests: Self-Reporting of Practitioner Misconduct," on August 6, 2025. This communication offers crucial insights for Certified Public Accountants (CPAs) and Enrolled Agents (EAs) who practice before the IRS, emphasizing the framework of Circular 230 and the potential advantages of proactive self-reporting of misconduct. As tax professionals, understanding these dynamics is paramount to maintaining our privilege of practice and managing potential disciplinary actions effectively.

The Regulatory Landscape and OPR’s Authority

Circular 230, officially titled Regulations Governing Practice before the Internal Revenue Service, sets forth the rules that govern eligible individuals representing taxpayers and practicing before the IRS. OPR is the IRS office tasked with administering and enforcing these regulations. While attorneys, CPAs, EAs, Enrolled Retirement Plan Agents (ERPAs), and enrolled actuaries are classified as "practitioners," appraisers are also regulated under Circular 230 and are subject to disciplinary sanctions, including disqualification.

Many of the rules within Circular 230 align with fundamental principles of professional practice across various professions, including law and accounting. These encompass duties such as diligence, competence, promptness, informing clients of errors or omissions on governmental submissions (like tax returns), and avoiding conflicts of interest. Violation of these rules, particularly if willful, reckless, or resulting from gross incompetence, can lead to prescribed sanctions from OPR. These sanctions include censure, suspension from practice, disbarment, or a monetary penalty, with appraisers facing disqualification.

Circular 230 also addresses instances of "disreputable conduct" for which practitioners can be sanctioned. Examples include certain criminal convictions, notably any state or federal felony conviction, and disbarment or suspension from practice as an attorney, CPA, public accountant, or actuary by any duly constituted authority. OPR routinely learns of such conduct through various internal and external avenues, including referrals from revenue agents regarding personal tax noncompliance, or through research that uncovers past felony convictions for financial crimes.

Beyond standard disciplinary actions, OPR also employs "expedited procedures" for indefinite suspension under section 10.82 of Circular 230. The OPR Director can use these procedures, after notice and an opportunity to respond, for five specific bases, which include:

Suspension or revocation of a license to practice law, certified public accountancy, or actuarial services.
Conviction of any crime "involving dishonesty or breach of trust, or any felony for which the conduct involved renders the practitioner unfit to practice before the Internal Revenue Service".
Imposition of a court sanction in a civil or criminal proceeding related to tax liability for conduct such as commencing or maintaining a case for delay, advancing groundless or frivolous arguments, or failing to pursue administrative remedies.

OPR discovers these events through methods similar to those for disreputable conduct under section 10.51, such as state bars, boards of accountancy, media reports, client complaints (often via Form 14157), and other information referrals. Given this propensity for discovery, practitioners should consider proactively addressing potential violations.

Self-Reporting Requirements for Licensees Versus Circular 230 Practitioners

The OPR Alert highlights a critical distinction between self-reporting obligations to state licensing bodies and to the IRS.

Obligations as State Licensees

Attorneys and CPAs, as licensees, are typically required to report convictions, findings of misconduct by governmental entities, civil judgments, court-imposed sanctions, or other adverse actions to their respective state bar, board of accountancy, or other licensing authority. These self-reporting requirements vary by state or comparable jurisdiction.

For instance, in North Carolina, CPAs must inform the state’s board of accountancy within 30 days of:

Any conviction for a criminal offense.
A judgment or settlement in a civil suit, bankruptcy action, administrative proceeding, or binding arbitration stemming from professional negligence allegations.
An inquiry or investigation by the criminal divisions of the IRS or a state department of revenue concerning personal or business tax matters.
Any lien filed by the IRS or a state department of revenue for unpaid taxes. This is mandated by 21 N.C. Admin. Code 8N.0208 and 21 N.C. Admin. Code 8N.0204(c). Furthermore, a CPA "shall not knowingly violate any state or federal tax laws or regulations in handling the CPA’s personal business affairs, the business affairs of an employer or client, or the business affairs of any company owned by the CPA" (21 N.C. Admin. Code 8N.0207).

North Carolina attorneys have less extensive rules but must promptly report the misappropriation or misapplication of trust funds or other property entrusted to them by a client (Rule 1.15-2(p)). They must also report being disciplined in any state or federal court for a violation of the Rules of Professional Conduct no later than 30 days after the order of discipline (R. 8.3(d)).

In Florida, professional licensees are required to report within 30 days a conviction, finding of guilt, guilty plea, or plea of nolo contendere (no contest) for any crime in any jurisdiction that relates to the practice of, or the ability to practice, their profession. Failure to self-report can result in disciplinary action, including a reprimand, a fine of up to $5,000, and a license suspension or permanent revocation (Fla. Stat. § 455.227(2)). Specific grounds for disciplinary action for CPAs in Florida include violations of section 455.227(1) (Fla. Stat. § 473.323(a)(1), (3)). Florida attorneys are required to report felony charges and convictions of any criminal offense to the Florida Bar’s executive director within prescribed timeframes (Fla. Stat. Bar Rule 3-7.2(c), (e)). They must also provide notice to the executive director and the Florida Supreme Court of "Discipline by a Foreign Jurisdiction" within 30 days of the effective date (Fla. Stat. Bar Rule 3-7.2(m)(1)).

The American Bar Association (ABA) Model Rules of Professional Conduct, adopted with variations by all 50 states and the District of Columbia, also address reporting. Model Rule 8.3(a) imposes an obligation on an attorney who "knows" that another attorney "has committed a violation of the Rules of Professional Conduct that raises a substantial question" as to their "honesty, trustworthiness or fitness as a lawyer in other respects" to "inform the appropriate professional authority". While this rule generally does not require attorneys to report their own misconduct, it does require reporting misconduct by others, even if it implicates the attorney’s own conduct.

Absence of Explicit Self-Reporting for Circular 230 Practitioners

Circular 230 itself does not impose an explicit self-reporting requirement on practitioners. However, certain requirements effectively lead to practitioners reporting unlawful acts, misdeeds, or governmental actions. For instance, practitioners who prepare federal tax returns and claims for refund must have and annually renew a Preparer Tax Identification Number (PTIN). Both online and paper PTIN applications, such as Form W-12, specifically ask new or renewing applicants about past felony convictions. Similarly, when EAs and ERPAs renew their enrollment, they are asked about criminal convictions or civil discipline on forms like Form 8554.

The Strategic Advantages of Self-Reporting to OPR

Despite the lack of an explicit self-reporting mandate within Circular 230, the OPR Alert strongly suggests that it may be in a practitioner’s best interest to self-report misconduct. The OPR will "virtually always be notified" of matters rising to the level of professional discipline enforced by a licensing agency or authority.

The primary benefits of proactive self-reporting to OPR include:

Potential for Concurrent Sanctions: If a practitioner involves OPR from the outset, it may be possible to arrange for twin suspension periods (e.g., from a state licensing authority and OPR) to be served simultaneously or as concurrently as possible.
Avoiding Extended or Deferred OPR Sanctions: If OPR learns of a state suspension months later, its investigation and action might commence well into or even after the state suspension has concluded. This could result in a new, potentially equivalent or lengthier, Circular 230 suspension (e.g., 12 months for a six or nine-month state suspension), or even an indefinite suspension, starting on a much later date.
Favorable Consideration of Cooperation: When OPR investigates probable Circular 230 violations, it contacts the practitioner in writing to inform them and provide an opportunity to respond. In negotiating or pursuing a sanction, OPR is authorized to take into account "all relevant facts and circumstances". The fact that a practitioner self-reported a violation(s) and cooperated in providing needed information would be considered relevant facts, as would any persuasive mitigating evidence. This cooperation can significantly influence the outcome.
Opportunity for Deferred Discipline Agreements: OPR frequently enters into agreements that defer an immediate sanction for a probationary period. In such agreements, the practitioner admits to specified violations and acknowledges that a pre-determined sanction will be imposed if they breach the terms. Absent a breach, the matter is closed without further action at the end of the term. This is particularly relevant for practitioners who have been civilly sanctioned, criminally convicted, or assessed IRS penalties related to their tax professional activities or personal tax noncompliance, especially if they accept responsibility for their conduct and express a genuine intention to reform their behavior. These instances are highlighted as prime candidates for deferred discipline agreements or other settlements.

OPR has the authority to issue written reprimands, which are private and do not affect practice eligibility. It also authorizes consensual sanctions through settlement negotiations, where OPR may accept a practitioner’s offer of consent to be sanctioned.

Suggested Actions for Tax Professionals

For CPAs and EAs, the OPR Alert underscores the importance of a nuanced understanding of OPR’s enforcement efforts and sanctions process. While Circular 230 does not explicitly require self-reporting, the practical implications make it a strategic consideration.

If you, as a Circular 230 practitioner, encounter a situation that could lead to professional discipline by a licensing agency or authority, or involves civil sanctions, criminal convictions, or tax-related penalties or liabilities, consider the following proactive steps:

Do not summarily rule out self-reporting to OPR. Recognize that OPR is likely to be notified eventually through other channels.
Evaluate the timing of your disclosure. Earlier engagement with OPR offers the best chance for concurrent or synchronized resolution with other disciplinary actions, potentially avoiding separate and consecutive suspensions.
Proactively contact OPR. If you have committed sanctionable misconduct, especially if you have already been sanctioned by another authority, consider informing OPR.
Prepare to accept responsibility for your conduct and demonstrate a genuine intention to reform your behavior. This posture is crucial for OPR to consider a deferred discipline agreement or a favorable settlement.
Compile and be ready to present any persuasive mitigating evidence. Your cooperation in obtaining and ascertaining needed or useful information will be taken into account.

By thoughtfully engaging with OPR and considering self-reporting when appropriate, tax professionals can potentially mitigate the severity and duration of disciplinary actions, ensuring a more predictable and manageable outcome for their privilege to practice before the IRS.

Prepared with assistance from NotebookLM.