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Abstract

Congress expressly authorized taxpayers to bring a private cause of action against the United States for economic damages caused by “unauthorized collection.” Codified as section 7433 of the Internal Revenue Code, this statute provides taxpayers with the exclusive remedy for abuses by IRS employees in connection with the collection of taxes. ... Despite the importance of section 7433 to check government unauthorized tortious collection activity, federal courts have turned section 7433 into a shield against excessive or unsupported IRS collection action, rather than maintain it as the small, but important, sword that Congress intended to give taxpayer. This Article contributes to the sparse literature on section 74331 by demonstrating that federal courts have effectively vitiated section 7433 by misreading its statute of limitationsto: (1) require a taxpayer to be put on notice that all collection action taken by the IRS is unauthorized and therefore to file section 7433 actions from the first time collection action is taken; and (2) prevent continuous unauthorized collection action to extend the statute of limitations start date until the last of such series. ... The mistake is that section 7433 is not a typical tax claims procedure statute, but a statute to protect citizens against tortious acts by government employees in the course of their work. In this respect, a claim under section 7433 belongs in the category of tort claims against federal employees under the Federal Tort Claim Act (FTCA). This is further supported by Congress’s action to make section 7433 the exclusive private action for tortious acts by IRS employees in connection with the collection of tax. Once the courts treat section 7433 claims like tort claims, not typical tax claim actions, courts will see why they should read section 7433’s statute of limitations just as they read the statute of limitations under FTCA.

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