26 U.S.C. § 7428 — Declaratory judgments relating to status

Page 3885 TITLE 26—INTERNAL REVENUE CODE § 7428 arising thereafter, see section 7(e) of Pub. L. 93–625, set out as an Effective Date note under section 6621 of this title. EFFECTIVE DATE Section applicable after Nov. 2, 1966, regardless of when title or lien of United States arose or when lien or interest of another person was acquired, except in a case in which a lien or title derived from enforcement of a lien held by United States has been enforced by a civil action or suit which has become final by judg- ment, sale, or agreement before Nov. 2, 1966, or in a case in which section would impair a priority held by any person other than United States holding a lien or interest prior to Nov. 2, 1966, operate to increase liabil- ity of such person, or shorten time of bringing suit with respect to transactions occurring before Nov. 2, 1966, see section 114(a)–(c) of Pub. L. 89–719, set out as Effec- tive Date of 1966 Amendments note under section 6323 of this title. § 7427. Tax return preparers In any proceeding involving the issue of whether or not a tax return preparer has will- fully attempted in any manner to understate the liability for tax (within the meaning of section 6694(b)), the burden of proof in respect to such issue shall be upon the Secretary. (Added Pub. L. 94–455, title XII, § 1203(b)(2)(A), Oct. 4, 1976, 90 Stat. 1690; amended Pub. L. 110–28, title VIII, § 8246(a)(2)(J)(i), May 25, 2007, 121 Stat. 202.) Editorial Notes PRIOR PROVISIONS A prior section 7427 was renumbered 7437 of this title. AMENDMENTS 2007—Pub. L. 110–28 substituted ‘‘Tax return pre- parers’’ for ‘‘Income tax return preparers’’ in section catchline and ‘‘a tax return preparer’’ for ‘‘an income tax return preparer’’ in text. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2007 AMENDMENT Amendment by Pub. L. 110–28 applicable to returns prepared after May 25, 2007, see section 8246(c) of Pub. L. 110–28, set out as a note under section 6060 of this title. § 7428. Declaratory judgments relating to status and classification of organizations under sec- tion 501(c)(3), etc. (a) Creation of remedy In a case of actual controversy involving— (1) a determination by the Secretary— (A) with respect to the initial qualification or continuing qualification of an organiza- tion as an organization described in section 501(c)(3) which is exempt from tax under sec- tion 501(a) or as an organization described in section 170(c)(2), (B) with respect to the initial classifica- tion or continuing classification of an orga- nization as a private foundation (as defined in section 509(a)), (C) with respect to the initial classifica- tion or continuing classification of an orga- nization as a private operating foundation (as defined in section 4942(j)(3)), (D) with respect to the initial classifica- tion or continuing classification of a cooper- ative as an organization described in section 521(b) which is exempt from tax under sec- tion 521(a), or (E) with respect to the initial qualification or continuing qualification of an organiza- tion as an organization described in section 501(c) (other than paragraph (3)) or 501(d) and exempt from tax under section 501(a), or (2) a failure by the Secretary to make a de- termination with respect to an issue referred to in paragraph (1), upon the filing of an appropriate pleading, the United States Tax Court, the United States Court of Federal Claims, or the district court of the United States for the District of Columbia may make a declaration with respect to such initial qualification or continuing qualification or with respect to such initial classification or continuing classification. Any such declaration shall have the force and effect of a decision of the Tax Court or a final judgment or decree of the district court or the Court of Federal Claims, as the case may be, and shall be review- able as such. For purposes of this section, a de- termination with respect to a continuing quali- fication or continuing classification includes any revocation of or other change in a qualifica- tion or classification. (b) Limitations (1) Petitioner A pleading may be filed under this section only by the organization the qualification or classification of which is at issue. (2) Exhaustion of administrative remedies A declaratory judgment or decree under this section shall not be issued in any proceeding unless the Tax Court, the Court of Federal Claims, or the district court of the United States for the District of Columbia determines that the organization involved has exhausted administrative remedies available to it within the Internal Revenue Service. An organization requesting the determination of an issue re- ferred to in subsection (a)(1) shall be deemed to have exhausted its administrative remedies with respect to a failure by the Secretary to make a determination with respect to such issue at the expiration of 270 days after the date on which the request for such determina- tion was made if the organization has taken, in a timely manner, all reasonable steps to se- cure such determination. (3) Time for bringing action If the Secretary sends by certified or reg- istered mail notice of his determination with respect to an issue referred to in subsection (a)(1) to the organization referred to in para- graph (1), no proceeding may be initiated under this section by such organization unless the pleading is filed before the 91st day after the date of such mailing. (4) Nonapplication for certain revocations No action may be brought under this section with respect to any revocation of status de- scribed in section 6033(j)(1). Page 3886 TITLE 26—INTERNAL REVENUE CODE § 7428 (c) Validation of certain contributions made dur- ing pendency of proceedings (1) In general If— (A) the issue referred to in subsection (a)(1) involves the revocation of a determina- tion that the organization is described in section 170(c)(2), (B) a proceeding under this section is initi- ated within the time provided by subsection (b)(3), and (C) either— (i) a decision of the Tax Court has be- come final (within the meaning of section 7481), or (ii) a judgment of the district court of the United States for the District of Co- lumbia has been entered, or (iii) a judgment of the Court of Federal Claims has been entered, and such decision or judgment, as the case may be, determines that the organization was not described in section 170(c)(2), then, notwithstanding such decision or judg- ment, such organization shall be treated as having been described in section 170(c)(2) for purposes of section 170 for the period begin- ning on the date on which the notice of the revocation was published and ending on the date on which the court first determined in such proceeding that the organization was not described in section 170(c)(2). (2) Limitation Paragraph (1) shall apply only— (A) with respect to individuals, and only to the extent that the aggregate of the con- tributions made by any individual to or for the use of the organization during the period specified in paragraph (1) does not exceed $1,000 (for this purpose treating a husband and wife as one contributor), and (B) with respect to organizations described in section 170(c)(2) which are exempt from tax under section 501(a) (for this purpose ex- cluding any such organization with respect to which there is pending a proceeding to re- voke the determination under section 170(c)(2)). (3) Exception This subsection shall not apply to any indi- vidual who was responsible, in whole or in part, for the activities (or failures to act) on the part of the organization which were the basis for the revocation. (d) Subpoena power for district court for District of Columbia In any action brought under this section in the district court of the United States for the District of Columbia, a subpoena requiring the attendance of a witness at a trial or hearing may be served at any place in the United States. (Added Pub. L. 94–455, title XIII, § 1306(a), Oct. 4, 1976, 90 Stat. 1717; amended Pub. L. 95–600, title VII, § 701(dd)(2), Nov. 6, 1978, 92 Stat. 2924; Pub. L. 97–164, title I, § 152, Apr. 2, 1982, 96 Stat. 46; Pub. L. 98–369, div. A, title X, § 1033(b), July 18, 1984, 98 Stat. 1039; Pub. L. 108–357, title III, § 317(a), Oct. 22, 2004, 118 Stat. 1470; Pub. L. 109–280, title XII, § 1223(c), Aug. 17, 2006, 120 Stat. 1091; Pub. L. 114–113, div. Q, title IV, § 406(a), Dec. 18, 2015, 129 Stat. 3120; Pub. L. 115–141, div. U, title IV, § 401(a)(325)(A), (B), Mar. 23, 2018, 132 Stat. 1199, 1200.) Editorial Notes PRIOR PROVISIONS A prior section 7428 was renumbered 7437 of this title. AMENDMENTS 2018—Subsec. (a). Pub. L. 115–141, § 401(a)(325)(B), sub- stituted ‘‘or the Court of Federal Claims’’ for ‘‘or the Claims Court’’ in concluding provisions. Pub. L. 115–141, § 401(a)(325)(A), substituted ‘‘United States Court of Federal Claims’’ for ‘‘United States Claims Court’’ in concluding provisions. Subsecs. (b)(2), (c)(1)(C)(iii). Pub. L. 115–141, § 401(a)(325)(B), substituted ‘‘Court of Federal Claims’’ for ‘‘Claims Court’’. 2015—Subsec. (a)(1)(E). Pub. L. 114–113 added subpar. (E). 2006—Subsec. (b)(4). Pub. L. 109–280, which directed addition of par. (4) at the end of section 7428(b), without specifying the act to be amended, was executed by making the addition at the end of subsec. (b) of this section, which is section 7428 of the Internal Revenue Code of 1986, to reflect the probable intent of Congress. 2004—Subsec. (a)(1)(D). Pub. L. 108–357 added subpar. (D). 1984—Subsec. (d). Pub. L. 98–369 added subsec. (d). 1982—Subsecs. (a), (b)(2), (c)(1)(C)(iii). Pub. L. 97–164 substituted ‘‘Claims Court’’ for ‘‘Court of Claims’’. 1978—Subsec. (a). Pub. L. 95–600 inserted provision re- lating to change in qualification or classification. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2015 AMENDMENT Pub. L. 114–113, div. Q, title IV, § 406(b), Dec. 18, 2015, 129 Stat. 3120, provided that: ‘‘The amendments made by this section [amending this section] shall apply to pleadings filed after the date of the enactment of this Act [Dec. 18, 2015].’’ EFFECTIVE DATE OF 2006 AMENDMENT Amendment by Pub. L. 109–280 applicable to notices and returns with respect to annual periods beginning after 2006, see section 1223(f) of Pub. L. 109–280, set out as a note under section 6033 of this title. EFFECTIVE DATE OF 2004 AMENDMENT Pub. L. 108–357, title III, § 317(b), Oct. 22, 2004, 118 Stat. 1470, provided that: ‘‘The amendments made by this section [amending this section] shall apply with re- spect to pleadings filed after the date of the enactment of this Act [Oct. 22, 2004].’’ EFFECTIVE DATE OF 1984 AMENDMENT Amendment by Pub. L. 98–369 applicable with respect to inquiries and examinations beginning after Dec. 31, 1984, see section 1033(d) of Pub. L. 98–369, set out as an Effective Date note under section 7611 of this title. EFFECTIVE DATE OF 1982 AMENDMENT Amendment by Pub. L. 97–164 effective Oct. 1, 1982, see section 402 of Pub. L. 97–164, set out as a note under section 171 of Title 28, Judiciary and Judicial Proce- dure. EFFECTIVE DATE OF 1978 AMENDMENT Amendment by Pub. L. 95–600 effective as if included in this section at the time section was added to this title, see section 701(dd)(3) of Pub. L. 95–600, set out as a note under section 7476 of this title. Page 3887 TITLE 26—INTERNAL REVENUE CODE § 7429 EFFECTIVE DATE Pub. L. 94–455, title XIII, § 1306(c), Oct. 4, 1976, 90 Stat. 1720, provided that: ‘‘The amendments made by this section [enacting this section and amending sections 7451, 7459, 7470, and 7482 of this title, enacting section 1507 of Title 28, Judiciary and Judicial Procedure, and amending sections 1346 and 2201 of Title 28] shall apply with respect to pleadings filed with the United States Tax Court, the district court of the United States for the District of Columbia, or the United States Court of Claims more than 6 months after the date of the enact- ment of this Act [Oct. 4, 1976] but only with respect to determinations (or requests for determinations) made after January 1, 1976.’’ § 7429. Review of jeopardy levy or assessment procedures (a) Administrative review (1) Administrative review (A) Prior approval required No assessment may be made under section 6851(a), 6852(a), 6861(a), or 6862, and no levy may be made under section 6331(a) less than 30 days after notice and demand for payment is made, unless the Chief Counsel for the In- ternal Revenue Service (or such Counsel’s delegate) personally approves (in writing) such assessment or levy. (B) Information to taxpayer Within 5 days after the day on which such an assessment or levy is made, the Secretary shall provide the taxpayer with a written statement of the information upon which the Secretary relied in making such assess- ment or levy. (2) Request for review Within 30 days after the day on which the taxpayer is furnished the written statement described in paragraph (1), or within 30 days after the last day of the period within which such statement is required to be furnished, the taxpayer may request the Secretary to review the action taken. (3) Redetermination by Secretary After a request for review is made under paragraph (2), the Secretary shall determine— (A) whether or not— (i) the making of the assessment under section 6851, 6861, or 6862, as the case may be, is reasonable under the circumstances, and (ii) the amount so assessed or demanded as a result of the action taken under sec- tion 6851, 6861, or 6862 is appropriate under the circumstances, or (B) whether or not the levy described in subsection (a)(1) is reasonable under the cir- cumstances. (b) Judicial review (1) Proceedings permitted Within 90 days after the earlier of— (A) the day the Secretary notifies the tax- payer of the Secretary’s determination de- scribed in subsection (a)(3), or (B) the 16th day after the request described in subsection (a)(2) was made, the taxpayer may bring a civil action against the United States for a determination under this subsection in the court with jurisdiction determined under paragraph (2). (2) Jurisdiction for determination (A) In general Except as provided in subparagraph (B), the district courts of the United States shall have exclusive jurisdiction over any civil ac- tion for a determination under this sub- section. (B) Tax Court If a petition for a redetermination of a de- ficiency under section 6213(a) has been time- ly filed with the Tax Court before the mak- ing of an assessment or levy that is subject to the review procedures of this section, and 1 or more of the taxes and taxable periods before the Tax Court because of such peti- tion is also included in the written state- ment that is provided to the taxpayer under subsection (a), then the Tax Court also shall have jurisdiction over any civil action for a determination under this subsection with re- spect to all the taxes and taxable periods in- cluded in such written statement. (3) Determination by court Within 20 days after a proceeding is com- menced under paragraph (1), the court shall determine— (A) whether or not— (i) the making of the assessment under section 6851, 6861, or 6862, as the case may be, is reasonable under the circumstances, and (ii) the amount so assessed or demanded as a result of the action taken under sec- tion 6851, 6861, or 6862 is appropriate under the circumstances, or (B) whether or not the levy described in subsection (a)(1) is reasonable under the cir- cumstances. If the court determines that proper service was not made on the United States or on the Secretary, as may be appropriate, within 5 days after the date of the commencement of the proceeding, then the running of the 20-day period set forth in the preceding sentence shall not begin before the day on which proper service was made on the United States or on the Secretary, as may be appropriate. (4) Order of court If the court determines that the making of such levy is unreasonable, that the making of such assessment is unreasonable, or that the amount assessed or demanded is inappro- priate, then the court may order the Secretary to release such levy, to abate such assessment, to redetermine (in whole or in part) the amount assessed or demanded, or to take such other action as the court finds appropriate. (c) Extension of 20-day period where taxpayer so requests If the taxpayer requests an extension of the 20- day period set forth in subsection (b)(2) and es- tablishes reasonable grounds why such extension should be granted, the court may grant an ex- tension of not more than 40 additional days.