§7433 — Civil damages for certain unauthorized collection actions

We hold that for each year in issue petitioners are liable for the penalty for an underpayment attributable to a substantial understatement ofincome tax under section 6662(a) and (b)(2).

Pursuant to section 7433(a), the United States District Court may only grant relief because of respondent's reckless, intentional, or negligent disregard of the Internal Revenue Code or - 19 - regulations.

he appeal was instituted or maintained primarily for delay or that the taxpayer's position in the appeal is frivolous or groundless." Section 6673(b)(1) authorizes the District Courts to impose a penalty not in excess of$10,000 ifa taxpayermaintains a "frivolous or groundless" position in a section 7433 proceeding. Section 6751(b)(1) was not intended as a broad restraint mechanism on the Federaljudiciary. It was not intended to cover the imposition ofpenalties that Congress intended could be imp

Section 7433 provides for civil damages for certain unauthorized collection actions. Section 7433(a) provides that a taxpayer may bring a civil action for damages against the United States in a U.S. District Court. The Tax Court is not vested with jurisdiction to consider petitioner’s claim for punitive damages under this provision. Accordingly, pe

7433 (cross- referenced by section 6304(c)); Hunter v. Commissioner, No 09 Civ 4268 (JSR) GWG), 2010 WL 2605715, at *6 (S.D.N.Y. June 29, 2010). There is no suggestion in the Code or regulations that behavior that might give rise to a cause ofaction under section 7433 can serve as a basis for setting aside otherwise permissible collection acti

Petitioners' administrative claim letter contended that they were entitled to civil damages under section 7433, which offset their total outstanding tax liability.

ce of deficiency determining a deficiency in income tax of$11,611. Petitioners dispute the entire $11,611 deficiency and demand the overpayment reported in their amended return. Additionally, petitioners seek $40,000 in damages from respondent under section 7433. - 3 - I. Notice ofDeficiency In the notice ofdeficiency, respondent disallowed a WPL vehicle expense deduction of$19,687; a WPL employee benefit expense deduction of$5,832; and a loss carryforward deduction of$33,006 claimed on Schedule

le references are to the Tax Court Rules ofPractice and Procedure, and dollar amounts are rounded to the nearest dollar. - 3 - [*3] for 2011; and (6) whether we havejurisdiction to hear petitioners' claim that respondent is liable for damages under section 7433. FINDINGS OF FACT Some ofthe facts have been stipulated, and the stipulated facts are incorporated in our findings by this reference. At the time the petition was filed petitioners resided in the Commonwealth ofVirginia. James Powell is t

(CCH) 1109 (2008) (sustaining respondent's filing ofnotice ofFederal tax lien against petitioner's property for outstanding tax liabilities owed for 2001 through 2003), as well as a civil suit against the Government in the District Court under section 7433 for damages resulting from respondent's alleged violations of section 7602(c)(2) and section 301.7602-1(c), Proced.

7433; Service Center Advice 1998-003 (Feb. 17, 1998) (discussing the problem). Statute-of-limitations waivers that the IRS procured this way were also possibly invalid as a product of duress, or otherwise unenforceable on equitable grounds." It came as no surprise, then, when on June 5, 1998, the IRS publicly apologized and said that it had im

The Haags sought civil damages for unauthorized collection actid s under section 7433, la 3The District Court found that the issue of the Haags' tax liability for 2001 was moot because the iability had been paid.

to due process was violated when respondent knew that petitioner was represented by counsel but called petitioner directly. Petitioner contends that respondent violated subsec. (a) (2) of sec. 6304, Fair Tax Collection Practices, and is subject to a sec. 7433 claim. We do not have jurisdiction over such claims. See sec. 7433(a). - 6 - did not follow the proper procedure for submitting the $60,000 payment. See sec. 301.7122-1(h)), Proced. & A min. Regs.; Rev. Proc. 2002-26, 2002-1 C.B. 746. Respo

If petitioner meant to make a section 7433 claim, which provides up to $1 million in civil damages, we note that such claims must be brought in a District Court of the United States.

recorded hearing and in refusing to clarify the statutes and regulations used to determine any taxable income, respondent violated the letter and intent of the law. Petitioner asked that the determination be vacated and that an award be issued under section 7433. However, petitioner declined to be sworn in or to offer any other testimony or evidence. Following the proceedings, each party filed a posttrial brief. Petitioner recapitulated his arguments made at trial and prayed for a series of reme

If petitioner meant to make a section 7433 claim, which provides for up to $1 million in civil damages for certain unauthorized collection actions, we note that such claims must be brought in a District Court of the United States.

Petitioner does not cite or rely upon any specific statute as a basis for these claims, and we generally have no jurisdiction over such matters.8 If petitioner’s $1 million claim for damages were meant to be predicated upon section 7433, which provides for up to $1 million in civil damages for certain unauthorized collection actions, we note that such claims must be brought in a district court of the United States.

* * * * * * * And let me further add, that if the IRS attempts to assess and collect the alleged Deficiency by distraint without responding to my above requests, I will sue the government pursuant to Code Section 7433 because the IRS will be “recklessly and intentionally disregarding” the statutes mentioned above together with their implementing regulations (or lack thereof) along with a number of other statutes that I need not list and/or identify here.

n in this Court."). Harrell III Harrell v. United States, 4 F.3d 996 (table only), 1993 U.S. App. LEXIS 22907, 1993 WL 339716 (text) (7th Cir. 1993) (after District Court granted summary judgment for Government in petitioner's suit for damages under sec. 7433 and imposition of $500 penalty under sec. 6673, Court of Appeals affirmed and imposed additional $1,000 frivolous appeal penalty). Harrell IV Harrell v. United States, 13 F.3d 232, 235 (7th Cir. 1993), affg. Harrell II ("So the District Cou

388 (1971) - 6 - (Federal agents may be sued in their individual capacity),1 and possible recovery under section 7433, which provides for civil damages for certain unauthorized collection actions.