
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: 26USC7433]

 
                     TITLE 26--INTERNAL REVENUE CODE
 
                Subtitle F--Procedure and Administration
 
                    CHAPTER 76--JUDICIAL PROCEEDINGS
 
        Subchapter B--Proceedings by Taxpayers and Third Parties
 
Sec. 7433. Civil damages for certain unauthorized collection 
        actions
        

(a) In general

    If, in connection with any collection of Federal tax with respect to 
a taxpayer, any officer or employee of the Internal Revenue Service 
recklessly or intentionally, or by reason of negligence, disregards any 
provision of this title, or any regulation promulgated under this title, 
such taxpayer may bring a civil action for damages against the United 
States in a district court of the United States. Except as provided in 
section 7432, such civil action shall be the exclusive 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 finding 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 sustained by the plaintiff 
    as a proximate result of the reckless or intentional or negligent 
    actions of the officer or employee, and
        (2) the costs of the action.

(c) Payment authority

    Claims pursuant to this section shall be payable 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 awarded under subsection (b) 
    unless the court determines that the plaintiff has exhausted the 
    administrative remedies available to such plaintiff within the 
    Internal Revenue Service.

                      (2) Mitigation of damages

        The amount of damages awarded under subsection (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 Federal 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 regulation 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 action 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, Sec. 6241(a), Nov. 10, 1988, 102 Stat. 
3747; amended Pub. L. 104-168, title VIII, Secs. 801(a), 802(a), July 
30, 1996, 110 Stat. 1465; Pub. L. 105-206, title III, Sec. 3102(a), (c), 
July 22, 1998, 112 Stat. 730.)


                            Prior Provisions

    A prior section 7433 was renumbered 7437 of this title.


                               Amendments

    1998--Subsec. (a). Pub. L. 105-206, Sec. 3102(a)(1)(A), inserted ``, 
or by reason of negligence,'' after ``recklessly or intentionally''.
    Subsec. (b). Pub. L. 105-206, Sec. 3102(a)(1)(B)(i), (c)(2), in 
introductory provisions, inserted ``or petition filed under subsection 
(e)'' after ``subsection (a)'' and inserted ``($100,000, in the case of 
negligence)'' after ``$1,000,000''.
    Subsec. (b)(1). Pub. L. 105-206, Sec. 3102(a)(1)(B)(ii), inserted 
``or negligent'' after ``reckless or intentional''.
    Subsec. (d)(1). Pub. L. 105-206, Sec. 3102(a)(2), substituted 
``Requirement that administrative remedies be exhausted'' for ``Award 
for damages may be reduced if administrative remedies not exhausted'' in 
heading and amended text of par. (1) generally. Prior to amendment, 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, Sec. 3102(c)(1), added subsec. (e).
    1996--Subsec. (b). Pub. L. 104-168, Sec. 801(a), substituted 
``$1,000,000'' for ``$100,000''.
    Subsec. (d)(1). Pub. L. 104-168, Sec. 802(a), amended par. (1) 
generally. Prior to amendment, par. (1) read as follows:
    ``(1) Requirement that administrative remedies be exhausted.--A 
judgment for damages shall not be awarded under subsection (b) unless 
the court determines that the plaintiff has exhausted the administrative 
remedies available to such plaintiff within the Internal Revenue 
Service.''


                    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

    Section 801(b) of Pub. L. 104-168 provided that: ``The amendment 
made by subsection (a) [amending this section] shall apply to actions by 
officers or employees of the Internal Revenue Service after the date of 
the enactment of this Act [July 30, 1996].''
    Section 802(b) of Pub. L. 104-168 provided that: ``The amendment 
made by this section [amending this section] shall apply in the case of 
proceedings commenced after the date of the enactment of this Act [July 
30, 1996].''

                  Section Referred to in Other Sections

    This section is referred to in sections 6304, 6335, 6673, 7426 of 
this title.
