REG, Regulation

Sources for Licensing and Disciplinary Systems

Last reviewed 2026-09-14

The standards and authorities behind PocketCPA's REG lessons on Licensing and Disciplinary Systems. The topic rests on State accountancy statutes / Uniform Accountancy Act / AICPA-NASBA model rules.

About this topic

Four different organizations can go after the same CPA for the same conduct, and none of them can take away anything it did not hand out. Almost every question in this area is decided by one move. Identify which body is acting, then read only the powers that body was granted.

Two structural facts follow from the grid, and both are tested directly.

Key points

• The OPR administers Circular 230 disciplinary actions: censure, suspension, and disbarment.
• State boards of accountancy grant and revoke CPA licenses; the AICPA disciplines members for ethics violations.
• A practitioner may be disbarred for conviction of a tax-related felony or for willful violations of Circular 230.
• Reinstatement after disbarment requires an application and a showing of fitness to practice.

What the lessons cover

1. State boards of accountancy
2. The three-E licensing requirements
3. Keeping the license active
4. Grounds for discipline and sanctions
5. The Circular 230 proceeding, from advance notice to final agency decision
6. Expedited suspension under Sec. 10.82
7. Three parallel systems, and the judicial fourth
8. Practice privileges, mobility, and firm permits under the UAA

Authoritative references

Where these requirements sit in the literature.

• Circular 230 Sec. 10.51 (31 C.F.R. Sec. 10.51) defines incompetence and disreputable conduct for which a practitioner may be sanctioned under Sec. 10.50. The list includes five kinds of conduct.
  • Conviction. A criminal offense involving dishonesty or breach of trust.
  • False information. Giving false or misleading information to Treasury.
  • Failure to file. Willfully failing to file.
  • Misappropriation. Misappropriating client funds meant for taxes.
  • Failure to sign. Willfully failing to sign a return the practitioner prepared.
• Sec. 10.3 answers who may practice before the IRS. Sec. 10.3(b) lets any certified public accountant not currently under suspension or disbarment practice by filing a written declaration that the CPA is currently qualified and is authorized to represent the party. The same paragraph carves out an exception: no declaration is required before rendering written advice covered under Sec. 10.37, but rendering that advice is practice before the IRS. Sec. 10.3(a) does the same for attorneys, and Sec. 10.3(f)(2) limits a registered tax return preparer to preparing and signing returns, claims for refund, and other documents for submission to the IRS.
• Sec. 10.36 carries the firm compliance-procedures duty.
  • Sec. 10.36(a) reaches any individual with, or individuals who have or share, principal authority and responsibility for overseeing a firm's practice under the part. The practice it covers expressly includes advice on federal tax matters and the preparation of returns and claims for refund, and the individual must take reasonable steps to ensure adequate procedures.
  • Sec. 10.36(b)(1) makes that individual disciplinable for a failure to ensure that adequate procedures exist.
  • Sec. 10.36(b)(3) reaches a pattern or practice of noncompliance that the individual, through willfulness, recklessness, or gross incompetence, failed to take prompt action to correct.
• Sec. 10.50 is the sanctions section.
  • Sec. 10.50(a) permits censure (expressly defined as a public reprimand), suspension, or disbarment from practice before the IRS after notice and an opportunity for a proceeding.
  • Sec. 10.50(c)(1)(i) permits a monetary penalty on the practitioner, and Sec. 10.50(c)(1)(ii) permits one on an employer, firm, or other entity that knew or reasonably should have known of the conduct.
  • Sec. 10.50(c)(2) caps each penalty at the gross income derived (or to be derived) from the conduct.
  • Sec. 10.50(c)(3) permits a penalty in addition to or in lieu of the other sanctions.
  • Sec. 10.50(d) allows the IRS to accept an offer of consent to be sanctioned in lieu of instituting or continuing a Sec. 10.60(a) proceeding.
  • Sec. 10.50(e) requires the sanction to reflect all relevant facts and circumstances.
• Sec. 10.52 sets the culpability standards. Sec. 10.52(a)(1) reaches a willful violation of any regulation in the part other than Sec. 10.33. Sec. 10.52(a)(2) reaches a reckless violation, or one through gross incompetence within the meaning of Sec. 10.51(a)(13), of Sec. 10.34, Sec. 10.35, Sec. 10.36 or Sec. 10.37, and only those four.
• Sec. 10.60 governs institution of a proceeding. Sec. 10.60(a) provides that a practitioner who violated the governing laws or the regulations may be reprimanded or, in accordance with Sec. 10.62, made subject to a proceeding for the sanctions described in Sec. 10.50. Sec. 10.60(c) is the advance-notice rule. Except as provided in Sec. 10.82, no proceeding will be instituted unless the proposed respondent has previously been advised in writing of the law, facts, and conduct warranting the action, and given an opportunity to respond. That opportunity covers disputing facts, asserting additional facts, and making arguments, including an explanation of mitigating circumstances.
• Sec. 10.62 fixes the contents of the complaint. It must name the respondent, give a clear and concise description of the facts and law constituting the basis for the proceeding, and be signed by an authorized representative under Sec. 10.69(a)(1). It is sufficient if it fairly informs the respondent of the charges. Sec. 10.62(b) requires the complaint to specify the sanction sought, and where that sanction is a suspension, to specify its duration. Sec. 10.62(c) requires notice of the time for answering, which may not be less than 30 days from service, and of the possibility of a decision by default.
• Sec. 10.64 governs the answer and default. Sec. 10.64(b) forbids general denials and requires the respondent to admit or deny each allegation specifically, or to state a lack of sufficient information, and to state affirmative defenses. Sec. 10.64(c) deems every allegation not denied to be admitted and proved, with no further evidence needed. Sec. 10.64(d) makes failure to answer in time an admission of the allegations and a waiver of hearing, permitting a decision by default that constitutes a decision under Sec. 10.76. Sec. 10.64(e) requires a signature above an acknowledgment that knowing and willful false statements may be punishable under 18 U.S.C. 1001.
• Sec. 10.76 carries the ALJ decision. Sec. 10.76(a)(1) sets 180 days after the conclusion of a hearing for the decision, which must include findings, conclusions, reasons, and an order of censure, suspension, disbarment, monetary penalty, disqualification, or dismissal. Sec. 10.76(a)(2) governs summary adjudication timing. Sec. 10.76(b) is the two-tier standard of proof. Preponderance applies where the sanction is censure or a suspension of less than six months, and clear and convincing evidence where the sanction is a monetary penalty, disbarment, or a suspension of six months or longer. Sec. 10.76(d) makes the decision the decision of the agency, without further proceedings, 30 days after the date of the ALJ's decision in the absence of an appeal.
• Sec. 10.77 and Sec. 10.78 carry appeal and review. Sec. 10.77(a) lets any party appeal by filing a notice of appeal with a brief stating exceptions and supporting reasons, without regard to the severity of the sanction. Sec. 10.77(b) requires the notice and brief to be filed in duplicate within 30 days of the date the ALJ decision is served on the parties. Sec. 10.77(c) gives the other party 30 days from receiving the brief to respond, and Sec. 10.77(d) bars other briefs and motions as of right. Sec. 10.78(a) makes the Secretary or delegate the maker of the agency decision, which should issue within 180 days after receipt of the appeal. Sec. 10.78(b) sets the standard of review: the ALJ decision will not be reversed unless clearly erroneous in light of the record and applicable law. Issues exclusively matters of law are reviewed de novo, and remand is available for unresolved issues.
• Sec. 10.79 states the effect of each sanction. Sec. 10.79(a): a disbarred respondent may not practice unless and until authorized under Sec. 10.81. Sec. 10.79(b): a suspended respondent may not practice during the period of suspension, and later representations may be conditioned under paragraph (d). Sec. 10.79(c): a censured respondent will be permitted to practice, subject to conditions under paragraph (d). Sec. 10.79(d) permits conditions designed to promote high standards of conduct for a reasonable period in light of the gravity of the violations. Its own illustration is a practitioner censured for failing to advise clients of a potential conflict of interest or to obtain written consents, who may be required to give the IRS copies of all consents obtained for an appropriate period. That requirement applies whether or not the copies are specifically requested.
• Sec. 10.80 and Sec. 10.90 cover the aftermath.
  • Sec. 10.80(a) provides that on a final order censuring, suspending, or disbarring a practitioner, notification goes to appropriate IRS officers and employees and to interested departments and agencies of the federal government. The same paragraph lets the IRS determine the manner of giving notice to the proper authorities of the state by which the person was licensed.
  • Sec. 10.90(a)(1) requires the IRS to maintain a roster and make it available for public inspection. The roster covers individuals, and where applicable employers, firms, or other entities, censured, suspended, or disbarred from practice or upon whom a monetary penalty was imposed.
• Sec. 10.81 governs reinstatement. Sec. 10.81(a) lets a practitioner disbarred or suspended under Sec. 10.60, or suspended under Sec. 10.82, or a disqualified appraiser, petition after the expiration of 5 years following the disbarment, suspension, or disqualification. The petition may come sooner, immediately following expiration of the suspension or disqualification period if that period is shorter than 5 years. Reinstatement is discretionary, and it will not be granted unless the IRS is satisfied of both of these.
  • The petitioner is not likely to engage thereafter in conduct contrary to the regulations.
  • Reinstatement would not be contrary to the public interest.
• Sec. 10.82 carries expedited suspension. The triggers sit in Sec. 10.82(b)(1) through (b)(5), the show cause order and required notices in Sec. 10.82(c), and the 30 calendar day response window in Sec. 10.82(d). The conference is in Sec. 10.82(e), the notice of suspension and its duration in Sec. 10.82(f), and the practitioner's demand for a Sec. 10.60 proceeding in Sec. 10.82(g).
• IRC Sec. 7407 is the judicial track against a preparer. Sec. 7407(a) authorizes a civil action in the name of the United States, commenced at the request of the Secretary. It fixes venue in the U.S. district court for the district where the preparer resides or has a principal place of business or where the taxpayer whose return is at issue resides.
• Sec. 7407(b)(1) lists four predicates.
  • Conduct subject to penalty under Sec. 6694 or Sec. 6695, or to any criminal penalty under the title (subparagraph A).
  • Misrepresenting eligibility to practice before the IRS, or misrepresenting experience or education (B).
  • Guaranteeing the payment of any tax refund or the allowance of any tax credit (C).
  • Other fraudulent or deceptive conduct substantially interfering with the proper administration of the internal revenue laws (D).
• Sec. 7407(b)(2) requires that injunctive relief be appropriate to prevent recurrence. The concluding sentence of Sec. 7407(b) supplies the broader remedy, letting the court enjoin the person from acting as a tax return preparer at all on two findings.
  • The preparer has continually or repeatedly engaged in that conduct.
  • An injunction against the conduct alone would not be sufficient.
• Uniform Accountancy Act Sec. 5 governs the certificate.
  • Sec. 5(a) conditions it on good moral character plus education, experience, and examination. Its comment records that the provision contemplates no citizenship, age, or residency requirement.
  • Sec. 5(b) narrows the character ground to conduct bearing on the propensity to provide services fairly and honestly and on a licensee's responsibilities, proved by clear and convincing evidence. It entitles a denied applicant to the findings, the record, and notice of appeal rights.
  • Sec. 5(c)(1) governs Examination eligibility, requiring a baccalaureate or higher degree whose total educational program includes an accounting concentration.
  • Sec. 5(c)(2) governs certificate education through three pathways, of which the grounded material identifies two.
  • Sec. 5(c)(2)(B) is the baccalaureate plus 30 additional semester credit hours.
  • Sec. 5(c)(2)(C) is the baccalaureate with an accounting concentration only.
  • Sec. 5(f) keys experience to the pathway used, with one year applying on the higher-education pathway.
  • Sec. 5(f)(2) requires two years on the Sec. 5(c)(2)(C) pathway.
  • Sec. 5(f)(3) defines qualifying experience as any service or advice involving accounting, attest, compilation, management advisory, financial advisory, tax, or consulting skills, in government, industry, academia, or public practice. It must be verified by a licensee, and its comment permits supervision by a non-licensee.
• Uniform Accountancy Act Sec. 6 governs issuance, renewal, and reciprocity. Sec. 6(a) directs the Board to grant or renew certificates to qualified applicants. Sec. 6(b) limits certificate terms to not more than three years. Sec. 6(c)(1)(B) is the reciprocity experience test, requiring four years of Sec. 5(f) experience, after passing the examination on which the certificate was based, and within the ten years immediately preceding the application. Sec. 6(c)(1)(C) requires catch-up CPE where the certificate issued more than four years before the application. Sec. 6(c)(2) requires an individual to request issuance of the state's certificate prior to establishing a principal place of business there. Sec. 6(d) makes CPE a condition of renewal and supplies the inactive election. That election carries a good-standing gate and a non-waivable labeling requirement on any document or device bearing the title other than the certificate. It also carries the retired substitution at age 55 and the narrow uncompensated-volunteer carve-out that expressly includes tax preparation services.
• Uniform Accountancy Act Sec. 7 governs firms. Sec. 7(a)(1)(C) exempts an out-of-state firm from the permit requirement only on four conjunctive conditions.
  • Ownership under Sec. 7(c).
  • Performance through an individual with practice privileges.
  • Lawfulness in the state of that individual's principal place of business.
  • Compliance with the peer review requirement of Sec. 7(h).
• Sec. 7(b) limits permit terms to not more than three years. Sec. 7(c)(1) exempts an individual with practice privileges performing services for which a firm permit is required from obtaining that state's certificate. Sec. 7(h) directs the Board to require peer review as a renewal condition no more frequently than once every three years.
• Uniform Accountancy Act Sec. 23 governs the practice privilege. Sec. 23(a)(1) grants it automatically on three conditions.
  • The individual's principal place of business is not in the state.
  • The individual holds a valid license in good standing from the state of that principal place of business.
  • The individual meets one of the qualifying education-and-experience combinations.
• Sec. 23(a)(2) preserves the privilege of an individual who held a valid active CPA license from any state as of December 31, 2024 and held privileges in the state on that date. Sec. 23(a)(3) provides that no notice or other submission is required and applies the privilege without regard to whether services are delivered in person, by telephone, or electronically. Sec. 23(a)(4) attaches the consents that make enforcement possible, and the consent runs to the employing firm as well. They include three in particular.
  • (A) consent to the host board's personal and subject matter jurisdiction and disciplinary authority.
  • (C) dependence of the privilege on the continuing validity of the home-state license.
  • (D) appointment of the home-state board as agent for service of process.
• Sec. 23(a)(5) permits attest services only through a firm qualifying under Sec. 7(a)(1)(C) or holding a permit.
• AICPA/NASBA Statement on Standards for Continuing Professional Education Programs, Standard No. 16 carries credit measurement, in four rules. The licensing board's own rules govern what increments it will accept.
  • Segments each shorter than 50 minutes are summed and treated as one program.
  • Credit is computed at one credit per 50-minute period.
  • Credit above the first full credit may be awarded for a group program in one-fifth or one-half increments.
  • A result that is not an allowable increment is rounded down.

How PocketCPA uses these sources

Every lesson is written in original words and cites the paragraph each rule comes from. No standard's text is reproduced. How lessons and questions are written and checked is set out in our methodology.

See also

• Sources for every REG topic
• Free REG sample questions
• The CPA exam glossary