What statement is true regarding IRS sanctions on electronic filing providers?

The correct statement regarding IRS sanctions on electronic filing providers is that the IRS may suspend a provider prior to administrative review for a level three infraction. This highlights the seriousness with which the IRS treats level three infractions, as they can lead to immediate action without the need for prior administrative review. Such infractions are considered severe, and the IRS has the authority to ensure that compliance standards are met without waiting for a drawn-out review process. This ability to suspend a provider outright helps maintain the integrity of the e-filing system, ensuring that only compliant providers are allowed to serve the public.

In contrast to the correct answer, the other statements do not accurately portray the IRS's protocols regarding sanctions. Sanctions take into account the severity of the infractions and are implemented to reinforce compliance among electronic filing providers. The specifics of each level of infraction dictate the corresponding response, with level three being particularly stringent.