The American Institute of CPAs is asking the Internal Revenue Service to reconsider some of its proposed monetary penalties for misbehaving practitioners and firms.

The AICPA sent comments to the acting IRS commissioner recommending changes in the IRS's proposed guidance for monetary penalties under Circular 230. The institute is asking for the IRS to consider additional factors in determining whether a monetary penalty is appropriate in a given situation, including the extent to which a monetary penalty might be disproportionate to the conduct.

The AICPA also wants the IRS to refrain from imposing monetary penalties against a firm for the conduct of a practitioner who is acting outside the scope of his or her agency relationship with the firm. In addition, the institute asked the IRS to decline to impose a monetary penalty under Circular 230 when another monetary penalty has already been imposed on the same behavior under another provision.

The institute would like the IRS to reconsider a special rule for determining the amount of a monetary sanction for larger engagements. It is also asking for clarification of the appropriate monetary penalty when both the practitioner and the firm are penalized for the same misconduct.

In general, the institute said that the non-monetary sanctions under Circular 230, such as suspension, disbarment or censure, are sufficient to adequately discipline individual practitioners, including employees and partners of a firm, for misconduct, but that monetary penalties should only be imposed when the misconduct is so serious that any other sanction under Circular 230 is inadequate. Before any final decision is made to impose monetary penalties, the AICPA contends that the affected practitioners and firms should have access to an independent review of the decision by the IRS's Office of Professional Responsibility.

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