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Yes, but only for certain kinds of IRS conduct and only if you meet the statute’s requirements. Federal law authorizes specific damages claims—for example, for qualifying misconduct during tax collection, failure to release a lien when required, certain wrongful levies, unauthorized disclosure of tax information, and some bankruptcy stay or discharge violations. An IRS mistake or unfair outcome alone does not establish a right to damages. The correct claim, required administrative steps, deadline, and court depend on what happened.
Which IRS actions may support a damages claim?
These statutes cover different conduct and, in some cases, different claimants. The IRS describes them in Internal Revenue Manual (IRM) 25.3.3 and IRM 5.17.5; bankruptcy procedures are also addressed in IRS bankruptcy guidance. A claim must satisfy the relevant statute, not just resemble one of the descriptions below.
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| Conduct | Potential route | Key qualification |
|---|---|---|
| Improper conduct connected with collecting federal tax | Internal Revenue Code (IRC) § 7433 | An IRS officer or employee must have recklessly or intentionally, or through negligence, disregarded a Code provision or implementing regulation in connection with collection. |
| Failure to release a tax lien | IRC § 7432 | The claim concerns a knowing or negligent failure to release a lien when the statutory release conditions are met. |
| Certain wrongful levies | IRC § 7426(h), subject to § 7426 eligibility rules | This damages route may apply to qualifying third parties; it is not a general damages option for every taxpayer who disputes a levy. |
| Unauthorized disclosure or inspection of return information | IRC § 7431 | The issue must concern protected tax information. The IRS describes § 7433 as the exclusive damages remedy for alleged defective collection activity, so the right statute depends on the facts and legal theory. |
| Violation of an automatic bankruptcy stay or discharge injunction | IRC § 7433(e) | The bankruptcy-related administrative process and petition procedure differ from ordinary collection-damages cases. |
For § 7433, the IRS’s IRM 5.17.5 describes the essential connection: the alleged disregard must occur “in connection with the collection” of a federal tax. A disagreement with the amount assessed is not, by itself, a collection-misconduct claim. The IRS describes § 7433 as the exclusive damages remedy for alleged improper collection actions, except for the separate lien remedy under § 7432.
What damages can be recovered?
For claims under § 7433(a)–(d) and § 7426(h), the IRS describes recovery as limited to the lesser of actual, direct economic damages proximately caused by the qualifying conduct or the applicable statutory cap: $1 million for reckless or intentional disregard, or $100,000 for negligence. These are ceilings, not typical awards or guaranteed minimums. The IRS does not identify a reliable typical recovery or success rate.
The IRS says inconvenience, emotional distress, and reputational injury are compensable only if they result in direct monetary loss. The amount requested in court generally cannot exceed the amount requested in the administrative claim, subject to exceptions the IRS describes for circumstances such as qualifying newly discovered evidence or intervening facts. Keep records that connect each claimed dollar loss to the alleged conduct.
How to prepare and file an ordinary damages claim
For claims under §§ 7426(h), 7432, and 7433(a)–(d), the IRS identifies Form 15237 and Publication 5390 as resources for the administrative process. Use the current instructions and confirm the proper office and delivery method for the particular claim.
- Identify the claimant and legal route. Establish whether the issue involves collection, lien release, a levy and qualifying third-party status, disclosure of return information, bankruptcy, a refund, or a proposed deficiency. Those are not interchangeable procedures.
- Check accrual and deadlines immediately. For §§ 7432 and 7433, the IRS describes a general two-year period to sue, running from accrual. Its guidance relates accrual to when a claimant had a reasonable opportunity to discover the essential elements of the possible claim. Do not assume that contacting the IRS or waiting for an administrative response stops the limitations clock.
- Submit a complete written administrative claim where required. The IRS describes a claim that identifies the claimant and address, sets out relevant facts, explains the injury and supporting evidence, states the amount sought with its calculation, and is signed. Incomplete or misrouted submissions can create serious problems; follow the current form and publication instructions.
- Use the applicable routing rule. The Internal Revenue Bulletin 2026-03 states that specified amendments to the § 7433 regulation apply on or after December 15, 2025, and directs written administrative claims to the Collection Advisory Group for the area where the taxpayer currently resides. It separately addresses bankruptcy-related claims and the Centralized Insolvency Operation. Check which rule applies based on the claim and filing date.
- Track exhaustion and the suit deadline separately. IRS guidance says administrative remedies are treated as exhausted when the IRS issues a decision or six months after a properly filed claim, whichever occurs first. It also describes a special rule allowing suit after submission, before the two-year period expires, when the claim is filed within the last six months of that period. These timing rules do not make it safe to delay.
- File in the court that has jurisdiction. The IRS describes ordinary § 7433 damages suits as filed in federal district court. Bankruptcy-related § 7433(e) damages petitions go to bankruptcy court under the applicable procedure. Confirm jurisdiction and venue for the actual claim.
Preserve IRS notices, account transcripts, collection letters, lien or levy records, proof of payment or other financial loss, administrative-claim delivery records, and a dated damages calculation. These records support the factual narrative, claimed injury, and amount requested.
Bankruptcy claims follow a separate path
If the alleged conduct concerns an automatic stay or discharge injunction, the IRS says the taxpayer must submit a claim to the IRS for relief or damages before pursuing the applicable remedy. IRS materials identify the Centralized Insolvency Operation for the bankruptcy-related administrative process and describe a petition for damages in bankruptcy court under the cited regulations. Because instructions depend on the kind of violation and governing regulation, use the current IRS bankruptcy guidance rather than assuming the ordinary Form 15237 route resolves the filing requirements.
Do not confuse damages with a refund or a deficiency challenge
If you want tax returned
A claim to recover tax paid is generally a refund claim, not a § 7433 damages suit. The IRS’s “Time You Can Claim a Credit or Refund” guidance gives the general deadline as the later of three years after filing the return or two years after paying the tax, subject to exceptions and payment-lookback limits. Income-tax refund claims may generally be made on an original or amended return; certain other taxes and penalties may use Form 843. The IRS describes full payment as part of the route to a refund suit in federal district court or the Court of Federal Claims.
If you dispute a proposed deficiency
A taxpayer may generally petition the U.S. Tax Court to challenge a deficiency without first paying the disputed amount, subject to procedural rules and deadlines. That is a challenge to the proposed tax liability, not a damages action for collection misconduct.
If you want collection stopped or reviewed
Filing a damages suit is not a routine way to halt assessment or collection. The Anti-Injunction Act generally bars suits to restrain tax assessment or collection, although specific statutory review routes and narrow exceptions exist. Collection due-process hearings and judicial review may be available in qualifying lien and levy situations. The IRS outlines these distinctions in its discussion of refund, deficiency, and collection-review procedures; determine the route and deadline for the notice you received.
When to get case-specific help
Federal suits against the United States depend on statutory consent to suit, claimant eligibility, exhaustion, jurisdiction, and strict deadlines. Before filing, have a qualified tax controversy attorney assess the alleged conduct, applicable statute, accrual date, required administrative submission, forum, and evidence of direct loss. IRS manuals and guidance explain the agency’s procedures, but the statute, regulations, court precedent, and facts control.
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