Last year Peter (EA) provided full bookkeeping services to several business clients as a way to supplement his income during the off-season. One such client received a letter from the IRS requesting payment of payroll taxes from the second and third quarters of the year. Peter checked his records and found that although he had filed the correct 941 form with the IRS and collected the withholding funds, he had forgotten to send these funds to the IRS. What penalty, if any, may Peter be subject to because of his omission under Circular 230?  

a. None, because it is the client's responsibility to ensure that all payments are made. 

b. None, because it wasn't his fault. 

c. Peter may be sanctioned under Section 10.51. 

d. None, because Circular 230 applies only to income tax and not to payroll tax