26 U.S.C. § 7431 — Civil damages for unauthorized inspection or disclosure of returns and return information

(a) In general: (1) If a U.S. officer or employee^* knowingly, or through negligence, inspects or discloses a taxpayer's tax return or return information in violation of section 6103, the taxpayer^* can sue the United States for damages in federal district court. (2) If someone who isn't a federal employee does the same thing — violating section 6103 or section 6104(c) — the taxpayer can sue that person instead, also in federal district court.

(b) Exceptions: There's no liability if the inspection or disclosure came from a good-faith but mistaken reading of section 6103, or if the taxpayer requested it.

(c) Damages: If the defendant is found liable, they must pay the taxpayer the sum of: (1) whichever is greater — $1,000 for each unauthorized act, or the taxpayer's actual damages (plus punitive damages if the act was willful or grossly negligent); (2) the costs of the lawsuit; and (3) for certain taxpayers (as defined by cross-reference to section 7430(c)(4)(A)(ii)), reasonable attorneys' fees — though if the United States is the defendant, attorneys' fees are awarded only if the taxpayer is the "prevailing party" under section 7430(c)(4).

(d) Time limit: The taxpayer can sue at any time within 2 years after discovering the unauthorized inspection or disclosure, regardless of the dollar amount involved.

(e) Notice of unlawful inspection: If someone is criminally charged by indictment or information with violating specific disclosure crimes (section 7213(a)(1) or (2), section 7213A(a), or 18 U.S.C. § 1030(a)(2)(B)), the Secretary^* must notify the taxpayer as soon as practical. The Secretary must also notify the taxpayer if the IRS or a federal or state agency proposes discipline against an employee for the same kind of unauthorized inspection or disclosure. That notice must state the date of the unauthorized act and the taxpayer's rights under the proposed disciplinary determination.

(f) Definitions: The terms "inspect," "inspection," "return," and "return information" mean the same as in section 6103(b).

(g) Extension to section 3406 information: Information gathered under section 3406 (backup withholding, including payee certification failures) counts as "return information" for this section. Using or inspecting that information for anything other than section 3406 purposes, or permitted section 6103 purposes, counts as a violation of section 6103. For the good-faith exception in subsection (b), references to section 6103 include section 3406.

(h) Special rule: For purposes of this section, references to section 6103 also include section 6311(e), regarding information obtained under section 6103(k)(9).