26 U.S.C. § 7426 : US Code - Section 7426: Civil actions by persons other than taxpayers

Search 26 U.S.C. § 7426 : US Code - Section 7426: Civil actions by persons other than taxpayers

(a) Actions permitted
(1) Wrongful levy
If a levy has been made on property or property has been sold
pursuant to a levy, and any person (other than the person against
whom is assessed the tax out of which such levy arose) who claims
an interest in or lien on such property and that such property
was wrongfully levied upon may bring a civil action against the
United States in a district court of the United States. Such
action may be brought without regard to whether such property has
been surrendered to or sold by the Secretary.
(2) Surplus proceed
If property has been sold pursuant to a levy, any person (other
than the person against whom is assessed the tax out of which
such levy arose) who claims an interest in or lien on such
property junior to that of the United States and to be legally
entitled to the surplus proceeds of such sale may bring a civil
action against the United States in a district court of the
United States.
(3) Substituted sale proceeds
If property has been sold pursuant to an agreement described in
section 6325(b)(3) (relating to substitution of proceeds of
sale), any person who claims to be legally entitled to all or any
part of the amount held as a fund pursuant to such agreement may
bring a civil action against the United States in a district
court of the United States.
(4) Substitution of value
If a certificate of discharge is issued to any person under
section 6325(b)(4) with respect to any property, such person may,
within 120 days after the day on which such certificate is
issued, bring a civil action against the United States in a
district court of the United States for a determination of
whether the value of the interest of the United States (if any)
in such property is less than the value determined by the
Secretary. No other action may be brought by such person for such
a determination.
(b) Adjudication
The district court shall have jurisdiction to grant only such of
the following forms of relief as may be appropriate in the
circumstances:
(1) Injunction
If a levy or sale would irreparably injure rights in property
which the court determines to be superior to rights of the United
States in such property, the court may grant an injunction to
prohibit the enforcement of such levy or to prohibit such sale.
(2) Recovery of property
If the court determines that such property has been wrongfully
levied upon, the court may -
(A) order the return of specific property if the United
States is in possession of such property;
(B) grant a judgment for the amount of money levied upon; or
(C) if such property was sold, grant a judgment for an amount
not exceeding the greater of -
(i) the amount received by the United States from the sale
of such property, or
(ii) the fair market value of such property immediately
before the levy.
For the purposes of subparagraph (C), if the property was
declared purchased by the United States at a sale pursuant to
section 6335(e) (relating to manner and conditions of sale), the
United States shall be treated as having received an amount equal
to the minimum price determined pursuant to such section or (if
larger) the amount received by the United States from the resale
of such property.
(3) Surplus proceeds
If the court determines that the interest or lien of any party
to an action under this section was transferred to the proceeds
of a sale of such property, the court may grant a judgment in an
amount equal to all or any part of the amount of the surplus
proceeds of such sale.
(4) Substituted sale proceeds
If the court determines that a party has an interest in or lien
on the amount held as a fund pursuant to an agreement described
in section 6325(b)(3) (relating to substitution of proceeds of
sale), the court may grant a judgment in an amount equal to all
or any part of the amount of such fund.
(5) Substitution of value
If the court determines that the Secretary's determination of
the value of the interest of the United States in the property
for purposes of section 6325(b)(4) exceeds the actual value of
such interest, the court shall grant a judgment ordering a refund
of the amount deposited, and a release of the bond, to the extent
that the aggregate of the amounts thereof exceeds such value
determined by the court.
(c) Validity of assessment
For purposes of an adjudication under this section, the
assessment of tax upon which the interest or lien of the United
States is based shall be conclusively presumed to be valid.
(d) Limitation on rights of action
No action may be maintained against any officer or employee of
the United States (or former officer or employee) or his personal
representative with respect to any acts for which an action could
be maintained under this section.
(e) Substitution of United States as party
If an action, which could be brought against the United States
under this section, is improperly brought against any officer or
employee of the United States (or former officer or employee) or
his personal representative, the court shall order, upon such terms
as are just, that the pleadings be amended to substitute the United
States as a party for such officer or employee as of the time such
action was commenced upon proper service of process on the United
States.
(f) Provision inapplicable
The provisions of section 7422(a) (relating to prohibition of
suit prior to filing claim for refund) shall not apply to actions
under this section.
(g) Interest
Interest shall be allowed at the overpayment rate established
under section 6621 -
(1) In the case of a judgment pursuant to subsection (b)(2)(B),
from the date the Secretary receives the money wrongfully levied
upon to the date of payment of such judgment;
(2) in the case of a judgment pursuant to subsection (b)(2)(C),
from the date of the sale of the property wrongfully levied upon
to the date of payment of such judgment; and
(3) in the case of a judgment pursuant to subsection (b)(5)
which orders a refund of any amount, from the date the Secretary
received such amount to the date of payment of such judgment.
(h) Recovery of damages permitted in certain cases
(1) In general
Notwithstanding subsection (b), if, in any action brought under
this section, there is a finding that any officer or employee of
the Internal Revenue Service recklessly or intentionally, or by
reason of negligence, disregarded any provision of this title the
defendant shall be liable to the plaintiff in an amount equal to
the lesser of $1,000,000 ($100,000 in the case of negligence) or
the sum of -
(A) actual, direct economic damages sustained by the
plaintiff as a proximate result of the reckless or intentional
or negligent disregard of any provision of this title by the
officer or employee (reduced by any amount of such damages
awarded under subsection (b)); and
(B) the costs of the action.
(2) Requirement that administrative remedies be exhausted;
mitigation; period
The rules of section 7433(d) shall apply for purposes of this
subsection.
(3) Payment authority
Claims pursuant to this section shall be payable out of funds
appropriated under section 1304 of title 31, United States Code.
(i) Cross reference
For period of limitation, see section 6532(c).