26 U.S.C. § 7432 — Civil damages for failure to release lien

submitted 38 years ago by Pub. L. 100-647 to r/title-26-INTERNAL-REVENUE-CODE · 297 words · no verdicts yet

in plain englishAI-generated · not legal advice

If an IRS employee fails to release a tax lien, the taxpayer can sue the United States. This applies whether the failure was intentional or careless. The taxpayer must first use up IRS appeals before suing, within 2 years. Damages cover actual losses and court costs, reduced by any losses the taxpayer could have avoided.

(a) In general: If an IRS officer or employee — knowingly or through negligence — fails to release a lien under section 6325 on a taxpayer's property, that taxpayer can sue the United States for damages in federal district court. (b) Damages: If the court finds the government liable, it must pay the taxpayer (1) the actual, direct economic damages the taxpayer suffered that wouldn't have happened but for the government's failure, plus (2) the costs of the lawsuit. (c) Payment authority: These damages are paid out of funds appropriated under section 1304 of title 31. (d) Limitations: (1) A court can't award damages unless it finds that the taxpayer first used up the administrative remedies available within the IRS. (2) The damages awarded get reduced by however much the taxpayer could have reasonably mitigated. (3) The lawsuit must be filed within 2 years after the right to sue arises, regardless of how much money is at stake. (e) Notice: The Secretary must write regulations setting out a reasonable procedure for a taxpayer to notify the Secretary that the IRS failed to release a lien.

the actual law source: uscode.house.gov ↗public domain

(a) In general

If any officer or employee of the Internal Revenue Service knowingly, or by reason of negligence, 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 defendant, the defendant shall be liable to the plaintiff in an amount equal to the sum of—

(1)

actual, direct economic damages sustained by the plaintiff which, but for the actions of the defendant, would not have been sustained, plus

(2)

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.

(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) 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.

Source credit: (Added Pub. L. 100–647, title VI, § 6240(a), Nov. 10, 1988, 102 Stat. 3746.)

history & why it existsrecord from the source credit

1988Enacted · Pub. L. 100-647 · 102 Stat. 3746

A history note hasn’t been published yet. The record shows enactment by Pub. L. 100-647 on 1988-11-10.

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