26 U.S.C. § 7433 — Civil damages for certain unauthorized

Page 3895 TITLE 26—INTERNAL REVENUE CODE § 7433 Subsec. (c)(1). Pub. L. 105–35, § 3(d)(1), (2), inserted ‘‘inspection or’’ before ‘‘disclosure’’ in subpars. (A) and (B)(i) and substituted ‘‘willful inspection or disclosure or an inspection or disclosure’’ for ‘‘willful disclosure or a disclosure’’ in subpar. (B)(ii). Subsec. (d). Pub. L. 105–35, § 3(d)(1), inserted ‘‘inspec- tion or’’ before ‘‘disclosure’’. Subsec. (e). Pub. L. 105–35, § 3(b), added subsec. (e). Former subsec. (e) redesignated (f). Subsec. (f). Pub. L. 105–35, § 3(b), (d)(3), redesignated subsec. (e) as (f) and amended it generally. Prior to amendment, subsec. (f) read as follows: ‘‘(f) RETURN; RETURN INFORMATION.—For purposes of this section, the terms ‘return’ and ‘return informa- tion’ have the respective meanings given such terms in section 6103(b).’’ Subsec. (g). Pub. L. 105–35, § 3(b), (d)(6), redesignated subsec. (f) as (g) and substituted ‘‘any inspection or use’’ for ‘‘any use’’ in par. (2). Pub. L. 105–34, § 1205(c)(2), added subsec. (g) relating to special rule for information obtained under section 6103(k)(8). 1983—Subsec. (f). Pub. L. 98–67 added subsec. (f). Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2019 AMENDMENT Pub. L. 116–25, title III, § 3002(b), July 1, 2019, 133 Stat. 1015, provided that: ‘‘The amendment made by this sec- tion [amending this section] shall apply to determina- tions proposed after the date which is 180 days after the date of the enactment of this Act [July 1, 2019].’’ EFFECTIVE DATE OF 2006 AMENDMENT Amendment by Pub. L. 109–280 effective Aug. 17, 2006, but not applicable to requests made before such date, see section 1224(c) of Pub. L. 109–280, set out as a note under section 6103 of this title. EFFECTIVE DATE OF 1998 AMENDMENT Amendment by section 3101(f) of Pub. L. 105–206 appli- cable to costs incurred more than 180 days after July 22, 1998, see section 3101(g) of Pub. L. 105–206, set out as a note under section 7430 of this title. Amendment by section 6012(b)(3) of Pub. L. 105–206 ef- fective, except as otherwise provided, as if included in the provisions of the Taxpayer Relief Act of 1997, Pub. L. 105–34, to which such amendment relates, see section 6024 of Pub. L. 105–206, set out as a note under section 1 of this title. EFFECTIVE DATE OF 1997 AMENDMENTS Pub. L. 105–35, § 3(e), Aug. 5, 1997, 111 Stat. 1106, pro- vided that: ‘‘The amendments made by this section [amending this section] shall apply to inspections and disclosures occurring on and after the date of the en- actment of this Act [Aug. 5, 1997].’’ Amendment by Pub. L. 105–34 effective on the day 9 months after Aug. 5, 1997, see section 1205(d) of Pub. L. 105–34, set out as a note under section 6103 of this title. EFFECTIVE DATE OF 1983 AMENDMENT Amendment by Pub. L. 98–67 effective Aug. 5, 1983, see section 110(c) of Pub. L. 98–67, set out as a note under section 31 of this title. EFFECTIVE DATE Pub. L. 97–248, title III, § 357(c), Sept. 3, 1982, 96 Stat. 646, provided that: ‘‘The amendments made by this sec- tion [enacting this section and repealing section 7217 of this title] shall apply with respect to disclosures made after the date of enactment of this Act [Sept. 3, 1982].’’ § 7432. Civil damages for failure to release lien (a) In general If any officer or employee of the Internal Rev- enue Service knowingly, or by reason of neg- ligence, fails to release a lien under section 6325 on property of the taxpayer, such taxpayer may bring a civil action for damages against the United States in a district court of the United States. (b) Damages In any action brought under subsection (a), upon a finding of liability on the part of the de- fendant, the defendant shall be liable to the plaintiff in an amount equal to the sum of— (1) actual, direct economic damages sus- tained by the plaintiff which, but for the ac- tions of the defendant, would not have been sustained, plus (2) the costs of the action. (c) Payment authority Claims pursuant to this section shall be pay- able out of funds appropriated under section 1304 of title 31, United States Code. (d) Limitations (1) Requirement that administrative remedies be exhausted A judgment for damages shall not be award- ed under subsection (b) unless the court deter- mines that the plaintiff has exhausted the ad- ministrative remedies available to such plain- tiff within the Internal Revenue Service. (2) Mitigation of damages The amount of damages awarded under sub- section (b)(1) shall be reduced by the amount of such damages which could have reasonably been mitigated by the plaintiff. (3) Period for bringing action Notwithstanding any other provision of law, an action to enforce liability created under this section may be brought without regard to the amount in controversy and may be brought only within 2 years after the date the right of action accrues. (e) Notice of failure to release lien The Secretary shall by regulation prescribe reasonable procedures for a taxpayer to notify the Secretary of the failure to release a lien under section 6325 on property of the taxpayer. (Added Pub. L. 100–647, title VI, § 6240(a), Nov. 10, 1988, 102 Stat. 3746.) Editorial Notes PRIOR PROVISIONS A prior section 7432 was renumbered 7437 of this title. Statutory Notes and Related Subsidiaries EFFECTIVE DATE Pub. L. 100–647, title VI, § 6240(c), Nov. 10, 1988, 102 Stat. 3747, provided that: ‘‘The amendments made by this section [enacting this section] shall apply to no- tices provided by the taxpayer of the failure to release a lien, and damages arising, after December 31, 1988.’’ § 7433. Civil damages for certain unauthorized collection actions (a) In general If, in connection with any collection of Fed- eral tax with respect to a taxpayer, any officer Page 3896 TITLE 26—INTERNAL REVENUE CODE § 7433 or employee of the Internal Revenue Service recklessly or intentionally, or by reason of neg- ligence, disregards any provision of this title, or any regulation promulgated under this title, such taxpayer may bring a civil action for dam- ages against the United States in a district court of the United States. Except as provided in section 7432, such civil action shall be the ex- clusive remedy for recovering damages resulting from such actions. (b) Damages In any action brought under subsection (a) or petition filed under subsection (e), upon a find- ing of liability on the part of the defendant, the defendant shall be liable to the plaintiff in an amount equal to the lesser of $1,000,000 ($100,000, in the case of negligence) or the sum of— (1) actual, direct economic damages sus- tained by the plaintiff as a proximate result of the reckless or intentional or negligent ac- tions of the officer or employee, and (2) the costs of the action. (c) Payment authority Claims pursuant to this section shall be pay- able out of funds appropriated under section 1304 of title 31, United States Code. (d) Limitations (1) Requirement that administrative remedies be exhausted A judgment for damages shall not be award- ed under subsection (b) unless the court deter- mines that the plaintiff has exhausted the ad- ministrative remedies available to such plain- tiff within the Internal Revenue Service. (2) Mitigation of damages The amount of damages awarded under sub- section (b)(1) shall be reduced by the amount of such damages which could have reasonably been mitigated by the plaintiff. (3) Period for bringing action Notwithstanding any other provision of law, an action to enforce liability created under this section may be brought without regard to the amount in controversy and may be brought only within 2 years after the date the right of action accrues. (e) Actions for violations of certain bankruptcy procedures (1) In general If, in connection with any collection of Fed- eral tax with respect to a taxpayer, any officer or employee of the Internal Revenue Service willfully violates any provision of section 362 (relating to automatic stay) or 524 (relating to effect of discharge) of title 11, United States Code (or any successor provision), or any regu- lation promulgated under such provision, such taxpayer may petition the bankruptcy court to recover damages against the United States. (2) Remedy to be exclusive (A) In general Except as provided in subparagraph (B), notwithstanding section 105 of such title 11, such petition shall be the exclusive remedy for recovering damages resulting from such actions. (B) Certain other actions permitted Subparagraph (A) shall not apply to an ac- tion under section 362(h) of such title 11 for a violation of a stay provided by section 362 of such title; except that— (i) administrative and litigation costs in connection with such an action may only be awarded under section 7430; and (ii) administrative costs may be awarded only if incurred on or after the date that the bankruptcy petition is filed. (Added Pub. L. 100–647, title VI, § 6241(a), Nov. 10, 1988, 102 Stat. 3747; amended Pub. L. 104–168, title VIII, §§ 801(a), 802(a), July 30, 1996, 110 Stat. 1465; Pub. L. 105–206, title III, § 3102(a), (c), July 22, 1998, 112 Stat. 730.) Editorial Notes PRIOR PROVISIONS A prior section 7433 was renumbered 7437 of this title. AMENDMENTS 1998—Subsec. (a). Pub. L. 105–206, § 3102(a)(1)(A), in- serted ‘‘, or by reason of negligence,’’ after ‘‘recklessly or intentionally’’. Subsec. (b). Pub. L. 105–206, § 3102(a)(1)(B)(i), (c)(2), in introductory provisions, inserted ‘‘or petition filed under subsection (e)’’ after ‘‘subsection (a)’’ and in- serted ‘‘($100,000, in the case of negligence)’’ after ‘‘$1,000,000’’. Subsec. (b)(1). Pub. L. 105–206, § 3102(a)(1)(B)(ii), in- serted ‘‘or negligent’’ after ‘‘reckless or intentional’’. Subsec. (d)(1). Pub. L. 105–206, § 3102(a)(2), substituted ‘‘Requirement that administrative remedies be ex- hausted’’ for ‘‘Award for damages may be reduced if ad- ministrative remedies not exhausted’’ in heading and amended text of par. (1) generally. Prior to amend- ment, text read as follows: ‘‘The amount of damages awarded under subsection (b) may be reduced if the court determines that the plaintiff has not exhausted the administrative remedies available to such plaintiff within the Internal Revenue Service.’’ Subsec. (e). Pub. L. 105–206, § 3102(c)(1), added subsec. (e). 1996—Subsec. (b). Pub. L. 104–168, § 801(a), substituted ‘‘$1,000,000’’ for ‘‘$100,000’’. Subsec. (d)(1). Pub. L. 104–168, § 802(a), amended par. (1) generally. Prior to amendment, par. (1) read as fol- lows: ‘‘(1) REQUIREMENT THAT ADMINISTRATIVE REMEDIES BE EXHAUSTED.—A judgment for damages shall not be awarded under subsection (b) unless the court deter- mines that the plaintiff has exhausted the administra- tive remedies available to such plaintiff within the In- ternal Revenue Service.’’ Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1998 AMENDMENT Amendment by Pub. L. 105–206 applicable to actions of officers or employees of Internal Revenue Service after July 22, 1998, see section 3102(d) of Pub. L. 105–206, set out as a note under section 7426 of this title. EFFECTIVE DATE OF 1996 AMENDMENT Pub. L. 104–168, title VIII, § 801(b), July 30, 1996, 110 Stat. 1465, provided that: ‘‘The amendment made by subsection (a) [amending this section] shall apply to actions by officers or employees of the Internal Rev- enue Service after the date of the enactment of this Act [July 30, 1996].’’ Pub. L. 104–168, title VIII, § 802(b), July 30, 1996, 110 Stat. 1465, provided that: ‘‘The amendment made by this section [amending this section] shall apply in the Page 3897 TITLE 26—INTERNAL REVENUE CODE § 7435 case of proceedings commenced after the date of the en- actment of this Act [July 30, 1996].’’ § 7433A. Civil damages for certain unauthorized collection actions by persons performing services under qualified tax collection con- tracts (a) In general Subject to the modifications provided by sub- section (b), section 7433 shall apply to the acts and omissions of any person performing services under a qualified tax collection contract (as de- fined in section 6306(b)) to the same extent and in the same manner as if such person were an employee of the Internal Revenue Service. (b) Modifications For purposes of subsection (a): (1) Any civil action brought under section 7433 by reason of this section shall be brought against the person who entered into the quali- fied tax collection contract with the Secretary and shall not be brought against the United States. (2) Such person and not the United States shall be liable for any damages and costs de- termined in such civil action. (3) Such civil action shall not be an exclu- sive remedy with respect to such person. (4) Subsections (c), (d)(1), and (e) of section 7433 shall not apply. (Added Pub. L. 108–357, title VIII, § 881(b)(1), Oct. 22, 2004, 118 Stat. 1626.) § 7434. Civil damages for fraudulent filing of in- formation returns (a) In general If any person willfully files a fraudulent infor- mation return with respect to payments pur- ported to be made to any other person, such other person may bring a civil action for dam- ages against the person so filing such return. (b) Damages In any action brought under subsection (a), upon a finding of liability on the part of the de- fendant, the defendant shall be liable to the plaintiff in an amount equal to the greater of $5,000 or the sum of— (1) any actual damages sustained by the plaintiff as a proximate result of the filing of the fraudulent information return (including any costs attributable to resolving defi- ciencies asserted as a result of such filing), (2) the costs of the action, and (3) in the court’s discretion, reasonable at- torneys’ fees. (c) Period for bringing action Notwithstanding any other provision of law, an action to enforce the liability created under this section may be brought without regard to the amount in controversy and may be brought only within the later of— (1) 6 years after the date of the filing of the fraudulent information return, or (2) 1 year after the date such fraudulent in- formation return would have been discovered by exercise of reasonable care. (d) Copy of complaint filed with IRS Any person bringing an action under sub- section (a) shall provide a copy of the complaint to the Internal Revenue Service upon the filing of such complaint with the court. (e) Finding of court to include correct amount of payment The decision of the court awarding damages in an action brought under subsection (a) shall in- clude a finding of the correct amount which should have been reported in the information re- turn. (f) Information return For purposes of this section, the term ‘‘infor- mation return’’ means any statement described in section 6724(d)(1)(A). (Added Pub. L. 104–168, title VI, § 601(a), July 30, 1996, 110 Stat. 1462; amended Pub. L. 105–206, title VI, § 6023(29), July 22, 1998, 112 Stat. 826.) Editorial Notes PRIOR PROVISIONS A prior section 7434 was renumbered 7437 of this title. AMENDMENTS 1998—Subsec. (b)(3). Pub. L. 105–206 substituted ‘‘at- torneys’ fees’’ for ‘‘attorneys fees’’. Statutory Notes and Related Subsidiaries EFFECTIVE DATE Pub. L. 104–168, title VI, § 601(c), July 30, 1996, 110 Stat. 1462, provided that: ‘‘The amendments made by this section [enacting this section and renumbering former section 7434 as 7435 of this title] shall apply to fraudulent information returns filed after the date of the enactment of this Act [July 30, 1996].’’ § 7435. Civil damages for unauthorized entice- ment of information disclosure (a) In general If any officer or employee of the United States intentionally compromises the determination or collection of any tax due from an attorney, cer- tified public accountant, or enrolled agent rep- resenting a taxpayer in exchange for informa- tion conveyed by the taxpayer to the attorney, certified public accountant, or enrolled agent for purposes of obtaining advice concerning the taxpayer’s tax liability, such taxpayer may bring a civil action for damages against the United States in a district court of the United States. Such civil action shall be the exclusive remedy for recovering damages resulting from such actions. (b) Damages In any action brought under subsection (a), upon a finding of liability on the part of the de- fendant, the defendant shall be liable to the plaintiff in an amount equal to the lesser of $500,000 or the sum of— (1) actual, direct economic damages sus- tained by the plaintiff as a proximate result of the information disclosure, and (2) the costs of the action. Damages shall not include the taxpayer’s liabil- ity for any civil or criminal penalties, or other losses attributable to incarceration or the impo- sition of other criminal sanctions. (c) Payment authority Claims pursuant to this section shall be pay- able out of funds appropriated under section 1304 of title 31, United States Code.