§7435 Civil Damages for Unauthorized Enticement of Information Disclosure

Summary

If a United States officer or employee intentionally interferes with figuring out or collecting a tax for an attorney, certified public accountant, or enrolled agent in return for information the taxpayer gave that adviser to get tax advice, the taxpayer can sue the United States in federal district court for money damages. That lawsuit is the only way to recover those damages. If the court finds the government liable, it must pay the lesser of $500,000 or the total of (1) the taxpayer’s actual, direct economic losses caused by the disclosure and (2) the costs of the lawsuit. Payments come from funds appropriated under section 1304 of title 31, United States Code. The suit can be filed even if the amount in dispute is small, but it must be brought within 2 years after the date the harmful actions would have been discovered with reasonable care. The court must pause the case if the Commissioner certifies an ongoing investigation or prosecution of the taxpayer. This right to sue does not apply if the taxpayer gave the information to the adviser to commit a crime or fraud.