26 U.S.C. § 7431 — Civil damages for unauthorized inspec-

Page 3893 TITLE 26—INTERNAL REVENUE CODE § 7431 1984—Subsec. (a)(2). Pub. L. 98–369 inserted reference to United States Claims Court. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2017 AMENDMENT Amendment by Pub. L. 115–97 applicable to taxable years beginning after Dec. 31, 2017, see section 11002(e) of Pub. L. 115–97, set out as a note under section 1 of this title. EFFECTIVE DATE OF 1998 AMENDMENT Pub. L. 105–206, title III, § 3101(g), July 22, 1998, 112 Stat. 729, provided that: ‘‘The amendments made by this section [amending this section and section 7431 of this title] shall apply to costs incurred (and, in the case of the amendment made by subsection (c) [amending this section], services performed) more than 180 days after the date of the enactment of this Act [July 22, 1998].’’ Amendment by sections 6012(h) and 6014(e) of Pub. L. 105–206 effective, except as otherwise provided, as if in- cluded 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 AMENDMENT Pub. L. 105–34, title XII, § 1285(d), Aug. 5, 1997, 111 Stat. 1039, provided that: ‘‘The amendments made by this section [amending this section] shall apply to civil actions or proceedings commenced after the date of the enactment of this Act [Aug. 5, 1997].’’ Pub. L. 105–34, title XIV, § 1453(b), Aug. 5, 1997, 111 Stat. 1055, provided that: ‘‘The amendment made by this section [amending this section] shall apply to pro- ceedings commenced after the date of the enactment of this Act [Aug. 5, 1997].’’ EFFECTIVE DATE OF 1996 AMENDMENT Amendment by section 701(a)–(c)(2) of Pub. L. 104–168 applicable in case of proceedings commenced after July 30, 1996, see section 701(d) of Pub. L. 104–168, set out as a note under section 6404 of this title. Pub. L. 104–168, title VII, § 702(b), July 30, 1996, 110 Stat. 1464, provided that: ‘‘The amendment made by this section [amending this section] shall apply in the case of proceedings commenced after the date of the en- actment of this Act [July 30, 1996].’’ Pub. L. 104–168, title VII, § 703(b), July 30, 1996, 110 Stat. 1464, provided that: ‘‘The amendment made by this section [amending this section] shall apply in the case of proceedings commenced after the date of the en- actment of this Act [July 30, 1996].’’ Pub. L. 104–168, title VII, § 704(b), July 30, 1996, 110 Stat. 1464, provided that: ‘‘The amendment made by this section [amending this section] shall apply in the case of proceedings commenced after the date of the en- actment of this Act [July 30, 1996].’’ EFFECTIVE DATE OF 1988 AMENDMENT Amendment by section 1015(i) of Pub. L. 100–647 effec- tive, except as otherwise provided, as if included in the provision of the Tax Reform Act of 1986, Pub. L. 99–514, to which such amendment relates, see section 1019(a) of Pub. L. 100–647, set out as a note under section 1 of this title. Pub. L. 100–647, title VI, § 6239(d), Nov. 10, 1988, 102 Stat. 3746, provided that: ‘‘The amendments made by this section [amending this section and section 504 of Title 5, Government Organization and Employees] shall apply to proceedings commencing after the date of the enactment of this Act [Nov. 10, 1988].’’ EFFECTIVE DATE OF 1986 AMENDMENT Pub. L. 99–514, title XV, § 1551(h), Oct. 22, 1986, 100 Stat. 2753, provided that: ‘‘(1) GENERAL RULE.—Except as provided in paragraph (2), the amendments made by this section [amending this section] shall apply to amounts paid after Sep- tember 30, 1986, in civil actions or proceedings, com- menced after December 31, 1985. ‘‘(2) SUBSECTION (f).—The amendment made by sub- section (f) [amending this section] shall take effect as if included in the amendments made by section 292 of the Tax Equity and Fiscal Responsibility Act of 1982 [see Effective Date note below]. ‘‘(3) APPLICABILITY OF AMENDMENTS TO CERTAIN PRIOR CASES.—The amendments made by this section shall apply to any case commenced after December 31, 1985, and finally disposed of before the date of the enactment of this Act [Oct. 22, 1986], except that in any such case, the 30-day period referred to in section 2412(d)(1)(B) of title 28, United States Code, or Rule 231 of the Tax Court, as the case may be, shall be deemed to com- mence on the date of the enactment of this Act [Oct. 22, 1986].’’ EFFECTIVE DATE OF 1984 AMENDMENT Amendment by Pub. L. 98–369 effective as if included in the provision of the Tax Equity and Fiscal Responsi- bility Act of 1982, Pub. L. 97–248, to which such amend- ment relates, see section 715 of Pub. L. 98–369, set out as a note under section 31 of this title. EFFECTIVE DATE Pub. L. 97–248, title II, § 292(e), Sept. 3, 1982, 96 Stat. 574, as amended by Pub. L. 98–369, div. A, title I, § 160, July 18, 1984, 98 Stat. 696, provided that: ‘‘(1) IN GENERAL.—The amendments made by this sec- tion [enacting this section and amending section 6673 of this title and section 2412 of Title 28, Judiciary and Ju- dicial Procedure] shall apply to civil actions or pro- ceedings commenced after February 28, 1983. ‘‘(2) PENALTY.—The amendments made by subsections (b) and (d)(2) [amending section 6673 of this title] shall apply to any action or proceeding in the United States Tax Court which— ‘‘(A) is commenced after December 31, 1982, or ‘‘(B) is pending in the United States Tax Court on the day which is 120 days after the date of the enact- ment of the Tax Reform Act of 1984 [July 18, 1984].’’ § 7431. Civil damages for unauthorized inspec- tion or disclosure of returns and return in- formation (a) In general (1) Inspection or disclosure by employee of United States If any officer or employee of the United States knowingly, or by reason of negligence, inspects or discloses any return or return in- formation with respect to a taxpayer in viola- tion of any provision of section 6103, such tax- payer may bring a civil action for damages against the United States in a district court of the United States. (2) Inspection or disclosure by a person who is not an employee of United States If any person who is not an officer or em- ployee of the United States knowingly, or by reason of negligence, inspects or discloses any return or return information with respect to a taxpayer in violation of any provision of sec- tion 6103 or in violation of section 6104(c), such taxpayer may bring a civil action for damages against such person in a district court of the United States. (b) Exceptions No liability shall arise under this section with respect to any inspection or disclosure— (1) which results from a good faith, but erro- neous, interpretation of section 6103, or Page 3894 TITLE 26—INTERNAL REVENUE CODE § 7431 (2) which is requested by the taxpayer. (c) 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) the greater of— (A) $1,000 for each act of unauthorized in- spection or disclosure of a return or return information with respect to which such de- fendant is found liable, or (B) the sum of— (i) the actual damages sustained by the plaintiff as a result of such unauthorized inspection or disclosure, plus (ii) in the case of a willful inspection or disclosure or an inspection or disclosure which is the result of gross negligence, pu- nitive damages, plus (2) the costs of the action, plus (3) in the case of a plaintiff which is de- scribed in section 7430(c)(4)(A)(ii), reasonable attorneys fees, except that if the defendant is the United States, reasonable attorneys fees may be awarded only if the plaintiff is the pre- vailing party (as determined under section 7430(c)(4)). (d) Period for bringing action Notwithstanding any other provision of law, an action to enforce any liability created under this section may be brought, without regard to the amount in controversy, at any time within 2 years after the date of discovery by the plain- tiff of the unauthorized inspection or disclosure. (e) Notification of unlawful inspection and dis- closure If any person is criminally charged by indict- ment or information with inspection or disclo- sure of a taxpayer’s return or return informa- tion in violation of— (1) paragraph (1) or (2) of section 7213(a), (2) section 7213A(a), or (3) subparagraph (B) of section 1030(a)(2) of title 18, United States Code, the Secretary shall notify such taxpayer as soon as practicable of such inspection or disclosure. The Secretary shall also notify such taxpayer if the Internal Revenue Service or a Federal or State agency (upon notice to the Secretary by such Federal or State agency) proposes an ad- ministrative determination as to disciplinary or adverse action against an employee arising from the employee’s unauthorized inspection or dis- closure of the taxpayer’s return or return infor- mation. The notice described in this subsection shall include the date of the unauthorized in- spection or disclosure and the rights of the tax- payer under such administrative determination. (f) Definitions For purposes of this section, the terms ‘‘in- spect’’, ‘‘inspection’’, ‘‘return’’, and ‘‘return in- formation’’ have the respective meanings given such terms by section 6103(b). (g) Extension to information obtained under sec- tion 3406 For purposes of this section— (1) any information obtained under section 3406 (including information with respect to any payee certification failure under sub- section (d) thereof) shall be treated as return information, and (2) any inspection or use of such information other than for purposes of meeting any re- quirement under section 3406 or (subject to the safeguards set forth in section 6103) for pur- poses permitted under section 6103 shall be treated as a violation of section 6103. For purposes of subsection (b), the reference to section 6103 shall be treated as including a ref- erence to section 3406. (h) Special rule for information obtained under section 6103(k)(9) For purposes of this section, any reference to section 6103 shall be treated as including a ref- erence to section 6311(e). (Added Pub. L. 97–248, title III, § 357(a), Sept. 3, 1982, 96 Stat. 645; amended Pub. L. 98–67, title I, § 104(b), Aug. 5, 1983, 97 Stat. 379; Pub. L. 105–34, title XII, § 1205(c)(2), Aug. 5, 1997, 111 Stat. 998; Pub. L. 105–35, § 3(a)–(d)(4), (6), Aug. 5, 1997, 111 Stat. 1105, 1106; Pub. L. 105–206, title III, § 3101(f), title VI, § 6012(b)(3), July 22, 1998, 112 Stat. 729, 819; Pub. L. 109–280, title XII, § 1224(b)(7), Aug. 17, 2006, 120 Stat. 1093; Pub. L. 116–25, title III, § 3002(a), July 1, 2019, 133 Stat. 1015.) Editorial Notes PRIOR PROVISIONS A prior section 7431 was renumbered section 7437 of this title. AMENDMENTS 2019—Subsec. (e). Pub. L. 116–25 inserted at end of concluding provisions ‘‘The Secretary shall also notify such taxpayer if the Internal Revenue Service or a Fed- eral or State agency (upon notice to the Secretary by such Federal or State agency) proposes an administra- tive determination as to disciplinary or adverse action against an employee arising from the employee’s unau- thorized inspection or disclosure of the taxpayer’s re- turn or return information. The notice described in this subsection shall include the date of the unauthorized inspection or disclosure and the rights of the taxpayer under such administrative determination.’’ 2006—Subsec. (a)(2). Pub. L. 109–280, which directed in- sertion of ‘‘or in violation of section 6104(c)’’ after ‘‘6103’’ in subsec. (a)(2) of section 7431, without speci- fying the act to be amended, was executed by making the insertion in subsec. (a)(2) of this section, which is section 7431 of the Internal Revenue Code of 1986, to re- flect the probable intent of Congress. 1998—Subsec. (c)(2). Pub. L. 105–206, § 3101(f), sub- stituted ‘‘, plus’’ for the period at end. Subsec. (c)(3). Pub. L. 105–206, § 3101(f), added par. (3). Subsecs. (g), (h). Pub. L. 105–206, § 6012(b)(3), redesig- nated subsec. (g), relating to special rule for informa- tion obtained under section 6103(k)(8), as (h), and sub- stituted ‘‘(9)’’ for ‘‘(8)’’ in heading. 1997—Pub. L. 105–35, § 3(d)(4), inserted ‘‘inspection or’’ before ‘‘disclosure’’ in section catchline. Subsec. (a)(1), (2). Pub. L. 105–35, § 3(a)(1), (2), sub- stituted ‘‘Inspection or disclosure’’ for ‘‘Disclosure’’ in headings and ‘‘inspects or discloses’’ for ‘‘discloses’’ in text. Subsec. (b). Pub. L. 105–35, § 3(c), amended subsec. (b) generally. Prior to amendment, subsec. (b) read as fol- lows: ‘‘(b) NO LIABILITY FOR GOOD FAITH BUT ERRONEOUS IN- TERPRETATION.—No liability shall arise under this sec- tion with respect to any disclosure which results from a good faith, but erroneous, interpretation of section 6103.’’ 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