What are the levels of sanctions under Circular 230?

The correct response is based on the structure of potential penalties established under Circular 230, which governs practice before the Internal Revenue Service. This document outlines a range of sanctions that can be imposed on tax professionals who fail to comply with ethical and professional standards.

The levels of sanctions under Circular 230 are designed to address the severity and nature of the violations committed by a tax professional. They encompass a spectrum of consequences, such as adverse impacts on the professional's practice, restrictions on their ability to represent clients, or even suspension from practice. This framework allows for flexibility in addressing infractions, recognizing that different violations may warrant different responses.

The options that include minor warnings and fines, probationary periods, or revocation of a professional license, while potentially valid in other contexts, do not accurately capture the specific sanctions laid out in Circular 230. The approach taken is more about directly impacting the tax professional's ability to operate within the IRS framework rather than issuing general warnings or imposing probation. Therefore, the sanctions outlined in Circular 230 reflect a focused response to maintain standards within the profession, ensuring that practitioners adhere to the required ethical guidelines.