26 USC 7435 – Civil damages for unauthorized enticement of information disclosure
(a) In general
If any officer or employee of the United States intentionally compromises the determination or collection of any tax due from an attorney, certified public accountant, or enrolled agent representing a taxpayer in exchange for information conveyed by the taxpayer to the attorney, certified public accountant, or enrolled agent for purposes of obtaining advice concerning the taxpayer’s tax liability, such taxpayer may bring a civil action for damages against the United States in a district court of the United States. Such civil action shall be the exclusive remedy for recovering damages resulting from such actions.
(b) Damages
Terms Used In 26 USC 7435
- Commissioner: means the Commissioner of Internal Revenue. See 26 USC 7701
- Damages: Money paid by defendants to successful plaintiffs in civil cases to compensate the plaintiffs for their injuries.
- Defendant: In a civil suit, the person complained against; in a criminal case, the person accused of the crime.
- employee: shall include a full-time life insurance salesman who is considered an employee for the purpose of chapter 21. See 26 USC 7701
- Fraud: Intentional deception resulting in injury to another.
- officer: includes any person authorized by law to perform the duties of the office. See 1 USC 1
- Plaintiff: The person who files the complaint in a civil lawsuit.
- taxpayer: means any person subject to any internal revenue tax. See 26 USC 7701
- United States: when used in a geographical sense includes only the States and the District of Columbia. See 26 USC 7701
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 lesser of $500,000 or the sum of—
(1) actual, direct economic damages sustained by the plaintiff as a proximate result of the information disclosure, and
(2) the costs of the action.
Damages shall not include the taxpayer’s liability for any civil or criminal penalties, or other losses attributable to incarceration or the imposition of other criminal sanctions.
(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) 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 actions creating such liability would have been discovered by exercise of reasonable care.
(e) Mandatory stay
Upon a certification by the Commissioner or the Commissioner’s delegate that there is an ongoing investigation or prosecution of the taxpayer, the district court before which an action under this section is pending shall stay all proceedings with respect to such action pending the conclusion of the investigation or prosecution.
(f) Crime-fraud exception
Subsection (a) shall not apply to information conveyed to an attorney, certified public accountant, or enrolled agent for the purpose of perpetrating a fraud or crime.