PRIA, Government Policy, Made Personal

Summary

If an IRS officer knowingly or through carelessness fails to remove a lien under section 6325 from a taxpayer’s property, the taxpayer can sue the United States in federal district court. If the court finds the government at fault, the taxpayer can get money for actual, direct financial losses caused by the failure plus the legal costs of the case. Claims are paid from funds appropriated under section 1304 of title 31, United States Code. The court will not award money unless the taxpayer first uses the IRS’s available internal remedies. Any award must be reduced by losses the taxpayer could reasonably have avoided. A lawsuit must be filed within 2 years after the right to sue starts. The Secretary must make rules so taxpayers can notify the IRS about a lien that was not released.

Title 26, §7432

Internal Revenue Code, Source: USLM XML via OLRC

(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)

(2)the costs of the action.

(c)Payment authority

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.

Notes & Related Subsidiaries

Editorial Notes

Prior Provisions

A prior section 7432 was renumbered 7437 of this title.

Statutory Notes and Related Subsidiaries

Effective Date

Pub. L. 100–647, title VI, § 6240(c), Nov. 10, 1988, 102 Stat. 3747, provided that: “The

Amendments

made by this section [enacting this section] shall apply to notices provided by the taxpayer of the failure to release a lien, and damages arising, after December 31, 1988.”

§7432 Civil Damages for Failure to Release Lien