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Title 26, Internal Revenue CodeRelease 119-110

§7434 Civil Damages for Fraudulent Filing of Information Returns

Title 26 › Subtitle F — Procedure and Administration › CHAPTER 76 — JUDICIAL PROCEEDINGS › Subchapter B — Proceedings by Taxpayers and Third Parties › § 7434

Last updated Sep 22, 2026|Official source

Summary

If someone on purpose files a fake information return saying they paid you, you can sue that person in court. If the court finds they did it, the person who filed it must pay you the larger of $5,000 or the sum of the harm you actually suffered because of the fake return (including costs to fix any tax problems), the costs of the lawsuit, and, if the judge allows, reasonable lawyer fees. You can sue no matter how much money is at issue. You must file within whichever is later: 6 years after the fake return was filed, or 1 year after you would have found it by using reasonable care. When you file the lawsuit, you must give a copy of the complaint to the IRS. If the court awards money, it must say the correct amount that should have been reported on the information return. Information return — any statement described in section 6724(d)(1)(A).

Full Legal Text

Title 26, §7434

Internal Revenue Code, Source: USLM XML via OLRC

(a)In general
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.
(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 greater of $5,000 or the sum of— (1)
(2)the costs of the action, and
(3)in the court’s discretion, reasonable attorneys’ fees.
(c)Period for bringing action
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— (1)
(2)1 year after the date such fraudulent information return would have been discovered by exercise of reasonable care.
(d)Copy of complaint filed with IRS
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.
(e)Finding of court to include correct amount of payment
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.
(f)Information return
For purposes of this section, the term “information return” means any statement described in section 6724(d)(1)(A).

Legislative History

Notes & Related Subsidiaries

Editorial Notes

Prior Provisions

A prior section 7434 was renumbered 7437 of this title.

Amendments

1998—Subsec. (b)(3). Pub. L. 105–206 substituted “attorneys’ fees” for “attorneys fees”.

Statutory Notes and Related Subsidiaries

Effective Date

Pub. L. 104–168, title VI, § 601(c), July 30, 1996, 110 Stat. 1462, provided that: “The

Amendments

made by this section [enacting this section and renumbering former section 7434 as 7435 of this title] shall apply to fraudulent information returns filed after the date of the enactment of this Act [July 30, 1996].”

Reference

Citations & Metadata

Citation

26 U.S.C. § 7434

Title 26, Internal Revenue Code

Last Updated

Sep 22, 2026

Release point: 119-110