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9652Unpublished changes to 26 USC 7433 Suits 4 Unlawful Tax Collection

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  • Legalbear
    Nov 30, 2005

      It occurred to me that some legislation had been passed that affected 26 USC § 7433 that was not reflected in the statutes as they are published in the Internal Revenue Code. I started doing some searches using the phrase "Internal Revenue Service Restructuring and Reform Act of 1998" and at http://www.pmstax.com/gen/bull9808.shtml#IIIA I found this:


      Civil Damages for Collection Actions


      Prior to the Act, a taxpayer was eligible to receive up to $1 million of civil damages against the

      United States as a result of an officer or employee of the Service recklessly or intentionally

      disregarding the provisions of the Code or Treasury Regulations in the collection of federal

      income tax from the taxpayer. The Act extends civil damages to the case of negligent acts by an

      officer or employee of the Service, subject to a cap of $100,000 in civil damages arising from

      such negligence. In addition, civil damages of up to $1 million are permitted for damages caused

      by an officer or employee of the Service who willfully violates the provisions of the Bankruptcy

      Code relating to automatic stays or discharges. Whereas prior to the Act, civil damages were

      subject to reduction if the taxpayer did not exhaust its administrative remedies within the Service,

      the Act now requires a taxpayer to exhaust such remedies before any civil damages are awarded.

      Act § 3102(a), (c) amending I.R.C. § 7433.


      In my opinion this confirms what I talk about at www.irslienthumper.com; I believe they are making you exhaust administrative remedies to give them a chance to prevent a lawsuit at the administrative level. From my point of view, that is a bonus to anyone that can write letters but really doesn’t know how to go to court. To me this means that you have a realistic chance of getting some relief by simply writing a letter that makes a credible threat to sue. Bear


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