§7433 — Civil damages for certain unauthorized collection actions
54 citing cases
Statute Text — 26 U.S.C. §7433
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.
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—
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
the costs of the action.
Claims pursuant to this section shall be payable out of funds appropriated under section 1304 of title 31, United States Code.
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.
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.
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.
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.
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.
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—
administrative and litigation costs in connection with such an action may only be awarded under section 7430; and
administrative costs may be awarded only if incurred on or after the date that the bankruptcy petition is filed.
Treasury Regulations
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Treas. Reg. §301.7433-1Civil cause of action for certain unauthorized collection actions
(a) In general. If, in connection with the collection of a federal tax with respect to a taxpayer, an officer or an employee of the Internal Revenue Service recklessly or intentionally , or by reason of negligence, disregards any provision of the Internal Revenue Code or any regulation promulgated under the Internal Revenue Code, such taxpayer may bring a civil action for damages against the United States in federal district court. The taxpayer has a duty to mitigate damages. The total amount of damages recoverable is the lesser of $1,000,000 ($100,000 in the case of negligence), or the sum of:
(1) The actual, direct economic damages sustained as a proximate result of the reckless or international actions of the officer or employee; and
(2) Costs of the action.
An action for damages filed in federal district court may not be maintained unless the taxpayer has filed an administrative claim pursuant to paragraph (e) of this section, and has waited for the period required under paragraph (d) of this section.
(b) Actual, direct economic damages—(1) Definition. Actual, direct economic damages are actual pecuniary damages sustained by the taxpayer as the proximate result of the reckless or intentional, or negligent, actions of an officer or an employee of the Internal Revenue Service. Injuries such as inconvenience, emotional distress and loss of reputation are compensable only to the extent that they result in actual pecuniary damages.
(2) Litigation costs and administrative costs not recoverable. Litigation costs and administrative costs are not recoverable as actual, direct economic damages. Litigation costs may be recoverable under section 7430 (see paragraph (h) of this section) or, solely to the extent described in paragraph (c) of this section, as costs of the action.
(i) Litigation costs. For purposes of this paragraph, litigation costs are any costs incurred pursuing litigation for relief from the action taken by the officer or employee of the Internal Revenue Service, including costs incurred pursuing a civil action in federal district court under paragraph (a) of this section. The term litigation costs includes the following:
(A) Court costs;
(B) Expenses of expert witnesses in connection with a court proceeding;
(C) Cost of any study, analysis, engineering report, test, or project prepared for a court proceeding; and
(D) Fees paid or incurred for the services of attorneys, or other individuals authorized to practice before the court, in connection with a court proceeding.
(ii) Administrative costs. For purposes of this section, administrative costs are any costs incurred pursuing administrative relief from the action taken by an officer or employee of the Internal Revenue Service, including costs incurred pursuing an administrative claim for damages under paragraph (e) of this section. The term administrative costs includes:
(A) Any administrative fees or similar charges imposed by the Internal Revenue Service; and
(B) Expenses, costs, and fees described in paragraph (b)(2)(i) of this section incurred pursuing administrative relief.
(c) Costs of the action. Costs of the action recoverable as damages under this section are limited to the following costs:
(1) Fees of the clerk and marshall;
(2) Fees of the court reporter for all or any part of the stenographic transcript necessarily obtained for use in the case;
(3) Fees and disbursements for printing and witnesses;
(4) Fees for exemplification and copies of paper necessarily obtained for use in the case;
(5) Docket fees; and
(6) Compensation of court appointed experts and interpreters.
(d) No civil action in federal district court prior to filing an administrative claim—(1) Except as provided in paragraph (d)(2) of this section, no action under paragraph (a) of this section shall be maintained in any federal district court before the earlier of the following dates:
(i) The date the decision is rendered on a claim filed in accordance with paragraph (e) of this section; or
(ii) The date six months after the date an administrative claim is filed in accordance with paragraph (e) of this section.
(2) If an administrative claim is filed in accordance with paragraph (e) of this section during the last six months of the period of limitations described in paragraph (g) of this section, the taxpayer may file an action in federal district court any time after the administrative claim is filed and before the expiration of the period of limitations.
(e) Procedures for an administrative claim—(1) Manner. An administrative claim for the lesser of $1,000,000 ($100,000 in the case of negligence) or actual, direct economic damages as defined in paragraph (b) of this section shall be sent in writing to the Area Director, Attn: Compliance Technical Support Manager of the area in which the taxpayer currently resides.
(2) Form. The administrative claim shall include:
(i) The name, current address, current home and work telephone numbers and any convenient times to be contacted, and taxpayer identification number of the taxpayer making the claim;
(ii) The grounds, in reasonable detail, for the claim (include copies of any available substantiating documentation or correspondence with the Internal Revenue Service);
(iii) A description of the injuries incurred by the taxpayer filing the claim (include copies of any available substantiating documentation or evidence);
(iv) The dollar amount of the claim, including any damages that have not yet been incurred but which are reasonably foreseeable (include copies of any available substantiating documentation or evidence); and
(v) The signature of the taxpayer or duly authorized representative.
For purposes of this paragraph, a duly authorized representative is any attorney, certified public accountant, enrolled actuary, or any other person permitted to represent the taxpayer before the Internal Revenue Service who is not disbarred or suspended from practice before the Internal Revenue Service and who has a written power of attorney executed by the taxpaper.
(f) No action in federal district court for any sum in excess of the dollar amount sought in the administrative claim. No action for actual, direct economic damages under paragraph (a) of this section shall be instituted in federal district court for any sum in excess of the amount (already incurred and estimated) of the administrative claim filed under paragraph (e) of this section, except where the increased amount is based upon newly discovered evidence not reasonably discoverable at the time the administrative claim was filed, or upon allegation and proof of intervening facts relating to the amount of the claim.
(g) Period of limitations—(1) Time for filing. A civil action under paragraph (a) of this section must be brought in federal district court within 2 years after the date the cause of action accrues.
(2) Right of action accrues. A cause of action under paragraph (a) of this section accrues when the taxpayer has had a reasonable opportunity to discover all essential elements of a possible cause of action.
(h) Recovery of costs under section 7430. Reasonable litigation costs, including attorney's fees, not recoverable under this section may be recoverable under section 7430. If following the Internal Revenue Service's denial of an administrative claim on the grounds that the Internal Revenue Service did not violate section 7433(a), a taxpayer brings a civil action for damages in a district court of the United States, and establishes entitlement to damages under this section, substantially prevails with respect to the amount of damages in controversy and meets the requirements of section 7430(c)(4)(A)(iii) (relating to notice and net worth requirements), the taxpayer will be considered a “prevailing party” for purposes of section 7430. Such taxpayer, therefore, will generally be entitled to attorney's fees and other reasonable litigation costs not recoverable under this section. For purposes of this paragraph, if the Internal Revenue Service does not respond on the merits to an administrative claim for damages within six months after the claim is filed, the Internal Revenue Service's failure to respond shall be considered a denial of the claim on the grounds that the Internal Revenue Service did not violate section 7433(a). Administrative costs, including attorney's fees incurred pursuing an administrative claim under paragraph (e) of this section, are not recoverable under section 7430.
(i) Effective dates. The portions of this section relating to reckless or intentional acts are applicable to actions taken by Internal Revenue Service officials after July 30, 1996. The portions of this section relating to negligent acts are applicable to actions taken by the Internal Revenue Service officials after July 22, 1998.
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Treas. Reg. §301.7433-1(a)In general.
In general. If, in connection with the collection of a federal tax with respect to a taxpayer, an officer or an employee of the Internal Revenue Service recklessly or intentionally , or by reason of negligence, disregards any provision of the Internal Revenue Code or any regulation promulgated under the Internal Revenue Code, such taxpayer may bring a civil action for damages against the United States in federal district court. The taxpayer has a duty to mitigate damages. The total amount of damages recoverable is the lesser of $1,000,000 ($100,000 in the case of negligence), or the sum of:
(1) The actual, direct economic damages sustained as a proximate result of the reckless or international actions of the officer or employee; and
(2) Costs of the action.
An action for damages filed in federal district court may not be maintained unless the taxpayer has filed an administrative claim pursuant to paragraph (e) of this section, and has waited for the period required under paragraph (d) of this section.
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Treas. Reg. §301.7433-1(b)Actual, direct economic damages—(1) Definition.
Actual, direct economic damages—(1) Definition. Actual, direct economic damages are actual pecuniary damages sustained by the taxpayer as the proximate result of the reckless or intentional, or negligent, actions of an officer or an employee of the Internal Revenue Service. Injuries such as inconvenience, emotional distress and loss of reputation are compensable only to the extent that they result in actual pecuniary damages.
(2) Litigation costs and administrative costs not recoverable. Litigation costs and administrative costs are not recoverable as actual, direct economic damages. Litigation costs may be recoverable under section 7430 (see paragraph (h) of this section) or, solely to the extent described in paragraph (c) of this section, as costs of the action.
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Treas. Reg. §301.7433-1(c)Costs of the action.
Costs of the action. Costs of the action recoverable as damages under this section are limited to the following costs:
(1) Fees of the clerk and marshall;
(2) Fees of the court reporter for all or any part of the stenographic transcript necessarily obtained for use in the case;
(3) Fees and disbursements for printing and witnesses;
(4) Fees for exemplification and copies of paper necessarily obtained for use in the case;
(5) Docket fees; and
(6) Compensation of court appointed experts and interpreters.
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Treas. Reg. §301.7433-1(d)§301.7433-1(d)
No civil action in federal district court prior to filing an administrative claim—(1) Except as provided in paragraph (d)(2) of this section, no action under paragraph (a) of this section shall be maintained in any federal district court before the earlier of the following dates:
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Treas. Reg. §301.7433-1(e)Procedures for an administrative claim—(1) Manner.
Procedures for an administrative claim—(1) Manner. An administrative claim for the lesser of $1,000,000 ($100,000 in the case of negligence) or actual, direct economic damages as defined in paragraph (b) of this section shall be sent in writing to the Area Director, Attn: Compliance Technical Support Manager of the area in which the taxpayer currently resides.
(2) Form. The administrative claim shall include:
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Treas. Reg. §301.7433-1(f)No action in federal district court for any sum in excess of the dollar amount sought in the administrative claim.
No action in federal district court for any sum in excess of the dollar amount sought in the administrative claim. No action for actual, direct economic damages under paragraph (a) of this section shall be instituted in federal district court for any sum in excess of the amount (already incurred and estimated) of the administrative claim filed under paragraph (e) of this section, except where the increased amount is based upon newly discovered evidence not reasonably discoverable at the time the administrative claim was filed, or upon allegation and proof of intervening facts relating to the amount of the claim.
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Treas. Reg. §301.7433-1(g)Period of limitations—(1) Time for filing.
Period of limitations—(1) Time for filing. A civil action under paragraph (a) of this section must be brought in federal district court within 2 years after the date the cause of action accrues.
(2) Right of action accrues. A cause of action under paragraph (a) of this section accrues when the taxpayer has had a reasonable opportunity to discover all essential elements of a possible cause of action.
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Treas. Reg. §301.7433-1(h)Recovery of costs under section 7430.
Recovery of costs under section 7430. Reasonable litigation costs, including attorney's fees, not recoverable under this section may be recoverable under section 7430. If following the Internal Revenue Service's denial of an administrative claim on the grounds that the Internal Revenue Service did not violate section 7433(a), a taxpayer brings a civil action for damages in a district court of the United States, and establishes entitlement to damages under this section, substantially prevails with respect to the amount of damages in controversy and meets the requirements of section 7430(c)(4)(A)(iii) (relating to notice and net worth requirements), the taxpayer will be considered a “prevailing party” for purposes of section 7430. Such taxpayer, therefore, will generally be entitled to attorney's fees and other reasonable litigation costs not recoverable under this section. For purposes of this paragraph, if the Internal Revenue Service does not respond on the merits to an administrative claim for damages within six months after the claim is filed, the Internal Revenue Service's failure to respond shall be considered a denial of the claim on the grounds that the Internal Revenue Service did not violate section 7433(a). Administrative costs, including attorney's fees incurred pursuing an administrative claim under paragraph (e) of this section, are not recoverable under section 7430.
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Treas. Reg. §301.7433-1(i)Effective dates.
Effective dates. The portions of this section relating to reckless or intentional acts are applicable to actions taken by Internal Revenue Service officials after July 30, 1996. The portions of this section relating to negligent acts are applicable to actions taken by the Internal Revenue Service officials after July 22, 1998.
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Treas. Reg. §301.7433-1(v)The signature of the taxpayer or duly authorized representative.
The signature of the taxpayer or duly authorized representative.
For purposes of this paragraph, a duly authorized representative is any attorney, certified public accountant, enrolled actuary, or any other person permitted to represent the taxpayer before the Internal Revenue Service who is not disbarred or suspended from practice before the Internal Revenue Service and who has a written power of attorney executed by the taxpaper.
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Treas. Reg. §301.7433-2Civil cause of action for violation of section 362 or 524 of the Bankruptcy Code
(a) In general. (1) If, in connection with the collection of a federal tax with respect to a taxpayer, an officer or employee of the Internal Revenue Service willfully violates any provision of section 362 (relating to the automatic stay) or section 524 (relating to discharge) of title 11, United States Code, or any regulation promulgated under such provision, the taxpayer may file a petition for damages against the United States in Federal bankruptcy court. The taxpayer has a duty to mitigate damages. The total amount of damages recoverable under this section is the lesser of $1,000,000, or the sum of—
(i) Actual, direct economic damages sustained as a proximate result of the willful actions of the officer or employee; and
(ii) Costs of the action.
(2) An action under this section constitutes the exclusive remedy under the Internal Revenue Code for violations of sections 362 and 524 of the Bankruptcy Code. In addition, taxpayers injured by violations of section 362 of the Bankruptcy Code may maintain actions under section 362(h) of the Bankruptcy Code (relating to an individual injured by a willful violation of the stay). However, any administrative or litigation costs in connection with an action under section 362(h) may be awarded, if at all, only under section 7430 of the Internal Revenue Code.
(b) Actual, direct economic damages—(1) Definition. See § 301.7433-1(b)(1).
(2) Litigation costs and administrative costs not recoverable as actual, direct economic damages. Litigation costs and administrative costs are not recoverable as actual, direct economic damages. These costs may be recoverable under section 7430 (see paragraph (h) of this section), or, solely to the extent described in paragraph (c) of this section, as costs of the action.
(c) Costs of the action. Costs of the action recoverable as damages under this section are limited to the costs set forth in § 301.7433-1(c).
(d) No civil action in federal bankruptcy court prior to filing an administrative claim—(1) In general. Except as provided in paragraph (d)(2) of this section, no action under paragraph (a)(1) of this section shall be maintained in any bankruptcy court before the earlier of the following dates—
(i) The date the decision is rendered on a claim filed in accordance with paragraph (e) of this section; or
(ii) The date that is six months after the date an administrative claim is filed in accordance with paragraph (e) of this section.
(2) When administrative claim filed in last six months of period of limitations. If an administrative claim is filed in accordance with paragraph (e) of this section during the last six months of the period of limitations described in paragraph (g) of this section, the taxpayer may petition the bankruptcy court any time after the administrative claim is filed and before the expiration of the period of limitations.
(e) Procedures for an administrative claim—(1) Manner. An administrative claim for the lesser of $1,000,000 or actual, direct economic damages as defined in paragraph (b) of this section shall be sent in writing to the Chief, Local Insolvency Unit, for the judicial district in which the taxpayer filed the underlying bankruptcy case giving rise to the alleged violation.
(2) Form. The administrative claim shall include—
(i) The name, taxpayer identification number, current address, and current home and work telephone numbers (with an identification of any convenient times to be contacted) of the taxpayer making the claim;
(ii) The location of the bankruptcy court in which the underlying bankruptcy case was filed and the case number of the case in which the violation occurred;
(iii) A description, in reasonable detail, of the violation (include copies of any available substantiating documentation or correspondence with the Internal Revenue Service);
(iv) A description of the injuries incurred by the taxpayer filing the claim (include copies of any available substantiating documentation or evidence);
(v) The dollar amount of the claim, including any damages that have not yet been incurred but which are reasonably foreseeable (include copies of any available documentation or evidence); and
(vi) The signature of the taxpayer or duly authorized representative.
(3) Duly authorized representative defined. For purposes of this paragraph (e), a duly authorized representative is any attorney, certified public accountant, enrolled actuary, or any other person permitted to represent the taxpayer before the Internal Revenue Service who is not disbarred or suspended from practice before the Internal Revenue Service and who has a written power of attorney executed by the taxpayer.
(f) No action in bankruptcy court for any sum in excess of the dollar amount sought in the administrative claim. No action for actual, direct economic damages under paragraph (a) of this section may be instituted in federal bankruptcy court for any sum in excess of the amount (already incurred and estimated) of the administrative claim filed under paragraph (e) of this section, except where the increased amount is based upon newly discovered evidence not reasonably discoverable at the time the administrative claim was filed, or upon allegation and proof of intervening facts relating to the amount of the claim.
(g) Period of limitations—(1) Time for filing. A petition for damages under paragraph (a) of this section must be filed in bankruptcy court within two years after the date the cause of action accrues.
(2) Right of action accrues. A cause of action under paragraph (a) of this section accrues when the taxpayer has had a reasonable opportunity to discover all essential elements of a possible cause of action.
(h) Recovery of litigation costs and administrative costs under section 7430—(1) In general. Litigation costs, as defined in § 301.7433-1(b)(2)(i), including attorneys fees, not recoverable under this section may be recoverable under section 7430 if a taxpayer challenges in whole or in part an Internal Revenue Service denial of an administrative claim for damages by filing a petition in the bankruptcy court. If, following the Internal Revenue Service's denial of an administrative claim for damages, a taxpayer files a petition in the bankruptcy court challenging that denial in whole or in part, substantially prevails with respect to the amount of damages in controversy, and meets the requirements of section 7430(c)(4)(A)(ii) (relating to net worth and size requirements), the taxpayer will be considered a prevailing party for purposes of section 7430, unless the Internal Revenue Service establishes that the position of the Internal Revenue Service in the proceeding was substantially justified. Such taxpayer will generally be entitled to attorneys' fees and other reasonable litigation costs not recoverable under this section. For purposes of this paragraph (h), if the Internal Revenue Service does not respond on the merits to an administrative claim for damages within six months after the claim is filed, the Internal Revenue Service's failure to respond will be considered a denial of the claim on the grounds that the Internal Revenue Service did not willfully violate Bankruptcy Code section 362 or 524.
(2) Administrative costs—(i) In general. Administrative costs, as defined in § 301.7433-1(b)(2)(ii), including attorneys' fees, not recoverable under this section may be recoverable under section 7430. See § 301.7430-8.
(ii) Limitation regarding recoverable administrative costs. Administrative costs may be awarded only if incurred on or after the date of filing of the bankruptcy petition that formed the basis for the stay on collection under Bankruptcy Code section 362 or the discharge injunction under Bankruptcy Code section 524, as the case might be.
(i) Effective date. This section is applicable to actions taken by the Internal Revenue Service officials after July 22, 1998.
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Treas. Reg. §301.7433-2(a)In general.
In general. (1) If, in connection with the collection of a federal tax with respect to a taxpayer, an officer or employee of the Internal Revenue Service willfully violates any provision of section 362 (relating to the automatic stay) or section 524 (relating to discharge) of title 11, United States Code, or any regulation promulgated under such provision, the taxpayer may file a petition for damages against the United States in Federal bankruptcy court. The taxpayer has a duty to mitigate damages. The total amount of damages recoverable under this section is the lesser of $1,000,000, or the sum of—
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Treas. Reg. §301.7433-2(b)Actual, direct economic damages—(1) Definition.
Actual, direct economic damages—(1) Definition. See § 301.7433-1(b)(1).
(2) Litigation costs and administrative costs not recoverable as actual, direct economic damages. Litigation costs and administrative costs are not recoverable as actual, direct economic damages. These costs may be recoverable under section 7430 (see paragraph (h) of this section), or, solely to the extent described in paragraph (c) of this section, as costs of the action.
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Treas. Reg. §301.7433-2(c)Costs of the action.
Costs of the action. Costs of the action recoverable as damages under this section are limited to the costs set forth in § 301.7433-1(c).
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Treas. Reg. §301.7433-2(d)No civil action in federal bankruptcy court prior to filing an administrative claim—(1) In general.
No civil action in federal bankruptcy court prior to filing an administrative claim—(1) In general. Except as provided in paragraph (d)(2) of this section, no action under paragraph (a)(1) of this section shall be maintained in any bankruptcy court before the earlier of the following dates—
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Treas. Reg. §301.7433-2(e)Procedures for an administrative claim—(1) Manner.
Procedures for an administrative claim—(1) Manner. An administrative claim for the lesser of $1,000,000 or actual, direct economic damages as defined in paragraph (b) of this section shall be sent in writing to the Chief, Local Insolvency Unit, for the judicial district in which the taxpayer filed the underlying bankruptcy case giving rise to the alleged violation.
(2) Form. The administrative claim shall include—
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Treas. Reg. §301.7433-2(f)No action in bankruptcy court for any sum in excess of the dollar amount sought in the administrative claim.
No action in bankruptcy court for any sum in excess of the dollar amount sought in the administrative claim. No action for actual, direct economic damages under paragraph (a) of this section may be instituted in federal bankruptcy court for any sum in excess of the amount (already incurred and estimated) of the administrative claim filed under paragraph (e) of this section, except where the increased amount is based upon newly discovered evidence not reasonably discoverable at the time the administrative claim was filed, or upon allegation and proof of intervening facts relating to the amount of the claim.
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Treas. Reg. §301.7433-2(g)Period of limitations—(1) Time for filing.
Period of limitations—(1) Time for filing. A petition for damages under paragraph (a) of this section must be filed in bankruptcy court within two years after the date the cause of action accrues.
(2) Right of action accrues. A cause of action under paragraph (a) of this section accrues when the taxpayer has had a reasonable opportunity to discover all essential elements of a possible cause of action.
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Treas. Reg. §301.7433-2(h)Recovery of litigation costs and administrative costs under section 7430—(1) In general.
Recovery of litigation costs and administrative costs under section 7430—(1) In general. Litigation costs, as defined in § 301.7433-1(b)(2)(i), including attorneys fees, not recoverable under this section may be recoverable under section 7430 if a taxpayer challenges in whole or in part an Internal Revenue Service denial of an administrative claim for damages by filing a petition in the bankruptcy court. If, following the Internal Revenue Service's denial of an administrative claim for damages, a taxpayer files a petition in the bankruptcy court challenging that denial in whole or in part, substantially prevails with respect to the amount of damages in controversy, and meets the requirements of section 7430(c)(4)(A)(ii) (relating to net worth and size requirements), the taxpayer will be considered a prevailing party for purposes of section 7430, unless the Internal Revenue Service establishes that the position of the Internal Revenue Service in the proceeding was substantially justified. Such taxpayer will generally be entitled to attorneys' fees and other reasonable litigation costs not recoverable under this section. For purposes of this paragraph (h), if the Internal Revenue Service does not respond on the merits to an administrative claim for damages within six months after the claim is filed, the Internal Revenue Service's failure to respond will be considered a denial of the claim on the grounds that the Internal Revenue Service did not willfully violate Bankruptcy Code section 362 or 524.
(2) Administrative costs—(i) In general. Administrative costs, as defined in § 301.7433-1(b)(2)(ii), including attorneys' fees, not recoverable under this section may be recoverable under section 7430. See § 301.7430-8.
(ii) Limitation regarding recoverable administrative costs. Administrative costs may be awarded only if incurred on or after the date of filing of the bankruptcy petition that formed the basis for the stay on collection under Bankruptcy Code section 362 or the discharge injunction under Bankruptcy Code section 524, as the case might be.
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Treas. Reg. §301.7433-2(i)Effective date.
Effective date. This section is applicable to actions taken by the Internal Revenue Service officials after July 22, 1998.
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Treas. Reg. §301.7433-2(v)§301.7433-2(v)
The dollar amount of the claim, including any damages that have not yet been incurred but which are reasonably foreseeable (include copies of any available documentation or evidence); and
(vi) The signature of the taxpayer or duly authorized representative.
(3) Duly authorized representative defined. For purposes of this paragraph (e), a duly authorized representative is any attorney, certified public accountant, enrolled actuary, or any other person permitted to represent the taxpayer before the Internal Revenue Service who is not disbarred or suspended from practice before the Internal Revenue Service and who has a written power of attorney executed by the taxpayer.
54 Citing Cases
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
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
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).
(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.
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.
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.
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
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.