Quick Fix Summary:
Confused about what counts as "willful" under Circular 230 (as of 2026)? At its core, it means someone voluntarily broke a law they knew applied to them—motive doesn't matter. To stay safe, tax pros should return client records promptly, steer clear of conflicts, and point out mistakes to clients. Mess up here, and you could face penalties, public censure, or even lose your right to practice before the IRS.
What exactly qualifies as "willful" under Circular 230?
This isn’t just IRS jargon. Courts have weighed in, most notably in Cheek v. United States (1991), and the definition still holds in 2026. The IRS uses this standard to decide penalties when practitioners break tax rules on purpose. Say you file a wrong return after learning the correct way—that’s willful, even if you didn’t set out to hurt anyone. The stakes are high because these violations carry tougher penalties under Circular 230, including possible disbarment from IRS practice.1
How do you actually spot willful conduct?
Here’s how to break it down:
- Did they know the rule? The first question is whether the practitioner understood the tax law they broke. Ignorance won’t fly here—Circular 230 doesn’t accept “I didn’t know” as an excuse.2
- Was it intentional? The next step is figuring out if the violation was a conscious choice. For example, deliberately leaving off income on a return counts, even if the practitioner didn’t personally gain from it.
- Did they tell the client about mistakes? Practitioners must let clients know about errors or discrepancies in their filings. Skip this step, and the violation gets worse under Circular 230, Section 10.28(a), which requires prompt communication of such issues.3
- Were there conflicts of interest? Double-check whether the practitioner’s actions hurt another client’s interests. Circular 230, §10.35, explicitly bans conflicts—meaning if representing one client would harm another, that’s a red flag.4
What if I'm still unsure whether conduct is willful?
Uncertainty is common, so here’s what you can do:
- Look at IRS updates: The IRS website has the latest takes on Circular 230, especially around penalties and disbarment. The agency occasionally refreshes its FAQs and circulars to reflect new court rulings.5
- Get a second opinion: If a practitioner faces disciplinary action, a tax attorney who knows Circular 230 inside and out can help weigh whether the conduct was truly willful. Legal advice might reveal ways to reduce penalties or even appeal.
- Check their credentials: Practitioners must keep up with continuing education and hold an active Preparer Tax Identification Number (PTIN). You can verify their compliance history using the IRS PTIN Directory.6
What’s the best way for practitioners to avoid willful conduct?
Prevention is simpler than cleanup. Here’s a quick checklist:
| Action | How to do it |
|---|---|
| Keep Records Updated | Make sure all client records are spot-on and returned without delay. Miss this, and you risk violating Section 10.28(a).7 |
| Disclose Conflicts Early | Write down and share any potential conflicts of interest with clients before you start working for them. That’s the rule under §10.35. |
| Advise Clients of Errors | If you catch a tax mistake, tell the client right away and get their okay before fixing or amending anything. |
| Monitor Regulatory Changes | Stay on top of Circular 230 updates. The document has five subparts covering everything from practice rules to penalties.8 |
| Avoid Contingent Fees for Certain Filings | Don’t charge contingency fees for original returns or amended returns filed more than 120 days after getting an examination notice.9 |
1 The “willful” definition comes from Cheek v. United States (1991), a landmark case in tax disputes.
2 Circular 230, Section 10.28(a), spells out the duty to return client records quickly. IRS Circular 230 (PDF).
3 Practitioners must tell clients about errors, per Circular 230 standards and IRS guidance.
4 Conflicts of interest get special attention in §10.35 of Circular 230. IRS Circular 230: Conflicts of Interest.
5 For the freshest IRS guidance, head to IRS.gov.
6 PTIN rules live on the IRS PTIN page.
7 The duty to return client records is laid out in Circular 230, Section 10.28(a).
8 Circular 230 splits into five subparts, each tackling different parts of tax practice. IRS Circular 230 (PDF).
9 Contingent fee rules are spelled out in Circular 230, covering what fee setups are allowed.
