
From the U.S. Code Online via GPO Access
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[Laws in effect as of January 2, 2001]
[Document not affected by Public Laws enacted between
  January 2, 2001 and January 28, 2002]
[CITE: 26USC7431]

 
                     TITLE 26--INTERNAL REVENUE CODE
 
                Subtitle F--Procedure and Administration
 
                    CHAPTER 76--JUDICIAL PROCEEDINGS
 
        Subchapter B--Proceedings by Taxpayers and Third Parties
 
Sec. 7431. Civil damages for unauthorized inspection or 
        disclosure of returns and return information
        

(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 
    information with respect to a taxpayer in violation of any provision 
    of section 6103, such taxpayer 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 employee 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 section 6103, 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 erroneous, 
    interpretation of section 6103, or
        (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 defendant, 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 inspection or 
        disclosure of a return or return information with respect to 
        which such defendant 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, punitive damages, plus

        (2) the costs of the action, plus
        (3) in the case of a plaintiff which is described 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 prevailing 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 plaintiff of the unauthorized inspection or disclosure.

(e) Notification of unlawful inspection and disclosure

    If any person is criminally charged by indictment or information 
with inspection or disclosure of a taxpayer's return or return 
information 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.

(f) Definitions

    For purposes of this section, the terms ``inspect'', ``inspection'', 
``return'', and ``return information'' have the respective meanings 
given such terms by section 6103(b).

(g) Extension to information obtained under section 3406

    For purposes of this section--
        (1) any information obtained under section 3406 (including 
    information with respect to any payee certification failure under 
    subsection (d) thereof) shall be treated as return information, and
        (2) any inspection or use of such information other than for 
    purposes of meeting any requirement under section 3406 or (subject 
    to the safeguards set forth in section 6103) for purposes 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 reference 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 reference to section 6311(e).

(Added Pub. L. 97-248, title III, Sec. 357(a), Sept. 3, 1982, 96 Stat. 
645; amended Pub. L. 98-67, title I, Sec. 104(b), Aug. 5, 1983, 97 Stat. 
379; Pub. L. 105-34, title XII, Sec. 1205(c)(2), Aug. 5, 1997, 111 Stat. 
998; Pub. L. 105-35, Sec. 3(a)-(d)(4), (6), Aug. 5, 1997, 111 Stat. 
1105, 1106; Pub. L. 105-206, title III, Sec. 3101(f), title VI, 
Sec. 6012(b)(3), July 22, 1998, 112 Stat. 729, 819.)


                            Prior Provisions

    A prior section 7431 was renumbered section 7437 of this title.


                               Amendments

    1998--Subsec. (c)(2). Pub. L. 105-206, Sec. 3101(f), substituted ``, 
plus'' for the period at end.
    Subsec. (c)(3). Pub. L. 105-206, Sec. 3101(f), added par. (3).
    Subsecs. (g), (h). Pub. L. 105-206, Sec. 6012(b)(3), redesignated 
subsec. (g), relating to special rule for information obtained under 
section 6103(k)(8), as (h), and substituted ``(9)'' for ``(8)'' in 
heading.
    1997--Pub. L. 105-35, Sec. 3(d)(4), inserted ``inspection or'' 
before ``disclosure'' in section catchline.
    Subsec. (a)(1), (2). Pub. L. 105-35, Sec. 3(a)(1), (2), substituted 
``Inspection or disclosure'' for ``Disclosure'' in headings and 
``inspects or discloses'' for ``discloses'' in text.
    Subsec. (b). Pub. L. 105-35, Sec. 3(c), amended subsec. (b) 
generally. Prior to amendment, subsec. (b) read as follows:
    ``(b) No Liability for Good Faith but Erroneous Interpretation.--No 
liability shall arise under this section with respect to any disclosure 
which results from a good faith, but erroneous, interpretation of 
section 6103.''
    Subsec. (c)(1). Pub. L. 105-35, Sec. 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, Sec. 3(d)(1), inserted ``inspection 
or'' before ``disclosure''.
    Subsec. (e). Pub. L. 105-35, Sec. 3(b), added subsec. (e). Former 
subsec. (e) redesignated (f).
    Subsec. (f). Pub. L. 105-35, Sec. 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 information' have the respective meanings 
given such terms in section 6103(b).''
    Subsec. (g). Pub. L. 105-35, Sec. 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, Sec. 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).


                    Effective Date of 1998 Amendment

    Amendment by section 3101(f) of Pub. L. 105-206 applicable 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 effective, 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

    Section 3(e) of Pub. L. 105-35 provided that: ``The amendments made 
by this section [amending this section] shall apply to inspections and 
disclosures occurring on and after the date of the enactment 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

    Section 357(c) of Pub. L. 97-248 provided that: ``The amendments 
made by this section [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].''

                  Section Referred to in Other Sections

    This section is referred to in sections 3406, 6105, 6311 of this 
title; title 5 section 3111.
