26 U.S.C. § 7434 — Civil damages for fraudulent filing of information returns
submitted 30 years ago by Pub. L. 104-168 to r/title-26-INTERNAL-REVENUE-CODE · 301 words · no verdicts yet
If someone willfully files a fake information return claiming a payment was made to another person, that person can sue for damages. Damages are at least $5,000, plus actual losses, court costs, and possibly attorneys' fees. The suit must be filed within 6 years, or 1 year after discovery — whichever is later.
(a) In general: If any person willfully files a fraudulent information return claiming payments were made to another person, that other person can sue the filer for damages.
(b) Damages: If the court finds liability, the defendant must pay the greater of $5,000 or the sum of (1) the plaintiff's actual damages that were a proximate result of the fraudulent filing (including costs of resolving any tax deficiencies caused by it), (2) the costs of the lawsuit, and (3) reasonable attorneys' fees, if the court decides to award them.
(c) Time limit: The lawsuit can be filed regardless of the dollar amount involved, but only within the later of (1) 6 years after the fraudulent information return was filed, or (2) 1 year after the date the plaintiff would have discovered it by exercising reasonable care.
(d) Copy to IRS: Anyone bringing this lawsuit must give the IRS a copy of the complaint when it's filed with the court.
(e) Court's finding: The court's decision awarding damages must include a finding of the correct amount that should have been reported on the information return.
(f) Definition: "Information return" here means any statement described in section 6724(d)(1)(A).
If any person willfully files a fraudulent information return with respect to payments purported to be made to any other person, such other person may bring a civil action for damages against the person so filing such return.
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 greater of $5,000 or the sum of—
any actual damages sustained by the plaintiff as a proximate result of the filing of the fraudulent information return (including any costs attributable to resolving deficiencies asserted as a result of such filing),
the costs of the action, and
in the court’s discretion, reasonable attorneys’ fees.
Notwithstanding any other provision of law, an action to enforce the liability created under this section may be brought without regard to the amount in controversy and may be brought only within the later of—
6 years after the date of the filing of the fraudulent information return, or
1 year after the date such fraudulent information return would have been discovered by exercise of reasonable care.
Any person bringing an action under subsection (a) shall provide a copy of the complaint to the Internal Revenue Service upon the filing of such complaint with the court.
The decision of the court awarding damages in an action brought under subsection (a) shall include a finding of the correct amount which should have been reported in the information return.
For purposes of this section, the term “information return” means any statement described in section 6724(d)(1)(A).
Source credit: (Added Pub. L. 104–168, title VI, § 601(a), July 30, 1996, 110 Stat. 1462; amended Pub. L. 105–206, title VI, § 6023(29), July 22, 1998, 112 Stat. 826.)
- 1996Enacted · Pub. L. 104-168 · 110 Stat. 1462
- 1998Amended · Pub. L. 105-206 · 112 Stat. 826
A history note hasn’t been published yet. The record shows enactment by Pub. L. 104-168 on 1996-07-30.
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