Identify disreputable conduct and the sanctions, penalties, and disciplinary procedures the OPR may impose on practitioners, and the preparer penalties under the Internal Revenue Code.

Enrolled agent Maria Delgado prepared Victor Cho's 2024 return and took an aggressive deduction based on a position she knew had no reasonable basis, producing an understatement of tax. The Internal Revenue Service now wants to impose a monetary penalty on Maria for the understatement itself. Which regime authorises that particular monetary penalty, and who imposes it?

• AA Circular 230 monetary sanction under Section 10.50, imposed by the Office of Professional Responsibility after a disciplinary proceeding before an administrative law judge.
• BAn accuracy-related penalty under Section 6662, assessed against Maria as the preparer because the understatement was attributable to the position she advised.
• CThe Internal Revenue Code preparer penalty under Section 6694, assessed by the Internal Revenue Service like a tax, separate from any Office of Professional Responsibility sanction.check_circle Correct
• DA censure imposed by the Office of Professional Responsibility, which carries an automatic monetary fine set by Circular 230 for each understated return.

Why A is wrong: Circular 230 does authorise a monetary penalty under Section 10.50, which makes this tempting, but that disciplinary penalty addresses misconduct in practice and is separate from a penalty assessed for the understatement of tax itself, which is the Section 6694 preparer penalty assessed by the Service.

Why B is wrong: Section 6662 is an accuracy-related penalty, so it sounds relevant to an understatement, but it applies to the taxpayer for the underpayment, not to the return preparer; the preparer-specific penalty for an understatement from an unreasonable position is Section 6694.

Why C is correct: A monetary penalty on the preparer for an understatement arising from an unreasonable position is the Section 6694 preparer penalty, which the Service assesses and collects in the same manner as a tax; it is distinct from the disciplinary sanctions the Office of Professional Responsibility imposes under Circular 230.

Why D is wrong: Censure is a real Circular 230 sanction, so naming it is plausible, but censure is a public reprimand that carries no automatic fine, and the monetary penalty for the understatement itself flows from Section 6694, assessed by the Service rather than ordered as part of a censure.