I would definitely refrain from ever stating that you personally will file a sanction report. Really, saying you will file a report is threatening, and you may be sanctioned (maybe even by the report you file yourself). Saying something like "You may be sanctioned if you continue this behavior." or something similar may be acceptable, but refraining from using the word "Sanction" at all is recommended. The most important thing is to keep your tone completely calm and civil when trying to talk to someone.
I definitely agree with Ceoran. If someone swears at you, and then you talk to him and he just swears more, then there is really no point in talking to him. Just file a report at that point. Really that's the point where a report is necessary because if you are mild mannered enough to actually talk to someone and he is trying to make you angry, there will be someone else on the server he will seriously make angry which may turn into something bad.
[8:32:45 PM] Dusty Lens: Oh no, let me get that. Hello? Oh it's my grandma. She says to be roleplay.
[12:49:19 AM] Elgatodiablo: You know its nice that you have all that proof and all, Bacon... but I just don't believe you.