There are a number of judicial actions that may be brought by taxpayers against the United States. See IRM 5.17.5, Suits Against the United States, for a review of the principal types of actions that may be brought against the United States.

Generally, when the United States is named as a defendant in a suit arising from the collection of tax liability, Area Counsel sends a defense letter to the Department of Justice, Tax Division. In some situations, however, the case will be directly referred to the local U.S. Attorney's Office.

Because meeting time limits in judicial actions is critical, promptly respond to all requests from Area Counsel; the Department of Justice, Tax Division; or the U.S. Attorney's Office. Strictly observe time frames identified in the requests.

Advisory is responsible for internal control of and actions pertaining to most litigation against the United States. Exceptions include:

This IRM provides instructional procedures relating to suits against the government. See also IRM 25.3.1.4, Authorization for Filing Suits, Counterclaims or Third Party Complaints for a discussion of the authority under IRC §7401

IRM 5.17.1, Legal Reference Guide for Revenue Officers, General Information provides a list of the parties with an explanation of their role with suits.

Program Reports: Suits are individual to the case and are of a wide variety and scope. When it is appropriate the Collection employee will provide a case Narrative Report for Area Counsel and the Department of Justice identifying all pertinent facts so that appropriate legal action may be taken. Narrative Reports are discussed in IRM 5.17.12, Legal Reference Guide for Revenue Officers, Investigation and Reports.

Program Effectiveness: Whenever litigation involving collection matters is pending or the institution of affirmative legal action to effect collection is being considered, revenue officers will, in the main, be investigators of facts. They will be required to prepare reports concerning any facts ascertained. The lawyers charged with the responsibility of handling the cases must rely on those facts and reports when making case decisions.

Collection Advisory maintains a copy of any suit documentation until the suit is closed. After case closure see Document 12990 Records and Information Management Records Control Schedules, under section Internal Revenue Service Records Control Schedule (RCS) 28, Tax Administration Collection, in:

Preserving electronically stored information is covered in:

The table lists commonly used acronyms and their definitions:

For information regarding some of the general characteristics of suits and claims for damages brought against the United States, see:

For information regarding some of the general characteristics and procedures followed in instituting and carrying out a lawsuit for effecting or assisting in the collection of taxes, and some of the most common types of lawsuits commenced by the United States, see IRM 5.17.4, Suits by the United States.

When service of a summons and complaint is received or litigation against the United States is otherwise discovered, the following actions must be taken:

Refer any questions to Advisory for resolution.

Review available case information and internal records to determine urgency (pending CSEDs, etc.) and proper course of action.

Review any summons, complaint, or subpoena received to determine response or appearance date set by the court.

Forward documents immediately to Area Counsel and/or the U.S. Attorney's Office depending upon established local practice for the type of suit. Retain copies as needed. If the response date or appearance date is imminent, call Area Counsel and/or the U.S. Attorney's Office to advise, and hand deliver the documents to them. If hand delivery is not feasible, send the documents by overnight mail.

Open a case on the Integrated Collection System (ICS) no later than 10 calendar days after receiving notice that a suit has been filed against the IRS.

Advise and provide applicable guidance to field or ACS personnel to whom affected accounts are assigned. Seek Area Counsel guidance as needed and appropriate.

Take applicable initial actions as described in IRM 25.3.6, Open Litigation Control, Monitoring and Closing Actions.

Secure all relevant TFRP administrative files, refund claim files, and other related files and forward them to Area Counsel.

Prepare and forward a memorandum to Area Counsel containing details and status of related assessments and a recommendation to initiate a counterclaim against the taxpayer who brought the refund suit, and a third party complaint to bring all parties into the action. See IRM 25.3.1.4, Authorization for Filing Suits, Counterclaims or Third Party Complaints.

Secure and forward necessary certified transcripts and other needed documents on the plaintiff's assessments, all related assessments, and certified transcripts and original returns for all underlying BMF liabilities.

If a tax module is in BAL DUE status, determine whether or not collection should be withheld and contact the unit/person to which the module is assigned with instructions.

See IRM 25.3.6, Open Litigation Control, Monitoring, and Closing Actions, for guidance regarding the input of Transaction Code 520 with corresponding closing codes to suspend the CSED.

If applicable, ensure that all NFTLs are timely filed or refiled as needed.

The following types of actions may be brought in state or federal court under 28 USC § 2410:

Advisory is responsible for all section 2410 suits. Notices of section 2410 suits received by other functions should be forwarded immediately to Advisory.

Refer to IRM 5.12.4, Judicial/Nonjudicial Foreclosures, for instructions and procedures pertaining to foreclosure actions to which the United States is made a party pursuant to 28 USC § 2410.

See IRM 5.17.5.18.1, 28 USC § 2410 Actions— Background and the provisions that follow, for a discussion of the types of actions that may be brought under 28 USC § 2410. These actions are generally brought in state court.

The following actions are the responsibility of the Disclosure Office:

Disclosure is responsible for providing any necessary information to Area Counsel and for securing testimony authorizations and providing guidance to subpoenaed employees. See IRM 25.3.3.6, Subpoenas and Requests for IRS Personnel to Testify or Produce Records above.

Prior to releasing any documents in actions involving the IRS, the Disclosure Office must coordinate such disclosures with Area Counsel.

Advisory is responsible for answering Area Counsel and U.S. Attorney requests for assistance on other suits against the United States, including, but not limited to, the following types of United States district court cases:

See IRM 25.3.6, Open Litigation Control, Monitoring, and Closing Actions, for additional guidance.

Taxpayers have the right to bring a civil action under IRC § 7345(e), Revocation or denial of passport in case of certain tax delinquencies, against the United States in United States district court or against the IRS in the Tax Court to determine whether the Internal Revenue Service’s certification as a seriously delinquent taxpayer made to the State Department was erroneous or whether the Commissioner has failed to reverse the certification when appropriate. If the court determines that such certification was erroneous or should have been reversed, then the court may order the Secretary of State be notified that the certification is reversed.

For more information see
IRM 5.17.5.21, IRC § 7345 Right to Determine Whether Certification as a Seriously Delinquent Taxpayer is Erroneous.; or, for the overall certification process under IRC § 7345 see IRM 5.1.12.27, Passport Revocation or Denial in Case of Certain Tax Debts.

Advisory’s Role: Advisory may receive information that a taxpayer is pursuing a civil action under IRC § 7345(e) in various ways. If the taxpayer files their action in a United States district court, then receipt of the summons and complaint may follow the format described in IRM 25.3.3.2, Receipt of Service of Summons and Complaint. If the taxpayer pursues their action in Tax Court, Advisory will not be notified and will not support the litigation.

Advisory may be asked to provide account transcripts or other information identified in IRM 25.3.3.5, Information for Defense of Suits when the action is in a United States district court.

Certified Transcript Requests:

In addition to the monitoring required under IRM 25.3.6, Open Litigation Control, Monitoring and Closing Actions for all IRC § 7345(e) United States district court cases with an open NF OI 132, Advisory will check IDRS at least every 6 months and upon request by Area Counsel or the Assistant United States Attorney handling the case to determine if the certification as a taxpayer with a seriously delinquent tax debt has been reversed.

CASE CLOSURE: Once the litigation is resolved, the NF OI 132 may be closed at the direction of Area Counsel or receipt of a judicial decision. Judicial decisions can be found in the Public Access to Court Electronic Records (PACER).

Treasury Regulation § 301.7433-1(e) contains administrative claim procedures for IRC § 7433. The administrative claim is to be sent to the Advisory Group Manager of the area where the taxpayer currently resides or, when dealing with a corporate entity, the area where the corporate headquarters is located.

There is no standard form used in preparing a claim, but the claim must contain the following information:

Each claim will be reviewed by Advisory to insure that it includes this information. A taxpayer whose claim does not include the information requested in (2) above will be notified in writing, within 14 days of the receipt of the claim, of the deficiencies and advised that the claim is not processable. This is not considered a rejection of the claim because a claim meeting the requirements of Treasury Regulation § 301.7433-1 has not been filed. Use Letter 2730, Non-processable Claim for Damages Letter, to notify the taxpayer of the deficiencies in the claim.

Administrative review of the claim should be completed as soon as possible but must be completed within 6 months of receipt of a processable claim. The taxpayer may bring suit either when a final decision is made on the claim or 6 months after the filing of a processable claim. A taxpayer must file an action in federal district court within two years after the cause of action accrues. If the taxpayer files an administrative claim within the last 6 months of the period of limitations, the taxpayer can file suit any time after the administrative claim is filed and before the expiration of the period of limitations.

A cause of action accrues under this provision when the taxpayer has reasonable opportunity to discover all essential elements of a possible civil action for damages in federal district court under IRC § 7433.

Letter 2732, Notification of Full or Partial Denial of Claim for Civil Damages, or Letter 2733, Notification of Full or Partial Allowance of Claim for Civil Damages, are to be used to notify the taxpayer of the results of the administrative review of the claim. If only a portion of the claim is being approved, both letters will be sent to the taxpayer at the same time.

Payment Authority - see IRM 25.3.3.9.4, Reimbursement of Damages and Costs, below.

There is no further administrative appeal of a claim for damages under this section if the claim is denied. The remedy provided by the statute is the institution of a suit in federal district court.

Date stamp the claim upon receipt. Advisory should complete the initial review of the claim within 30 days of receipt.

Open an NF OI on ICS under 185 - Claim Other. The type of claim should be noted in the comments section of the NF OI. Review the closed files for any prior claims.

The statutory elements contained in IRC § 7433 must be applied to each processable claim. In determining whether a claim is administratively allowable the reviewer must determine whether:

The facts and circumstances of each case must be evaluated. The reviewer must determine if the alleged infraction did, in fact, take place. He or she must also determine whether or not the infraction was a reckless, intentional, or negligent disregard of the law.

The reviewer must also ascertain when, in time, the taxpayer became aware of the violation or should have become aware of the violation. Claims filed more than two years after the violation must receive special scrutiny. The taxpayer’s two year limitation to bring suit begins at the point when the taxpayer has had a reasonable opportunity to discover all essential elements in a possible cause of action. The reviewer must determine when the taxpayer knew or should have known of the violation. Claims filed outside the two year limitation will be rejected.

Certain criteria guide the amount of an administrative settlement under this section, for example:

Acceptance or rejection of each claim will be reviewed by Area Counsel for agreement. Include the Advisory administrative file and all related information.

After concurrence by Area Counsel, submit the file to the Advisory Territory Manager for approval.

Advisory must process and respond to all claims that appear to be brought under IRC § 7433, whether or not they appear to be frivolous. Follow the procedures set forth in IRM 25.3.3.9.1, Administrative Claim Procedures above, for any correspondence received from a taxpayer that indicates in some fashion that the taxpayer is attempting to file a claim for damages for unauthorized collection action.

If a claim for unauthorized collection action appears to contain frivolous arguments, send the following documents/information to the Ogden Frivolous Return Program (also known as the Frivolous Filer Unit) after the claim is processed and a response is sent to the taxpayer:

Prepare and include Form 3210, Document Transmittal, when mailing the items. Use the Ogden Compliance Campus address: 1973 N Rulon White Blvd., M/S 4450, Ogden, UT 84404, Attention: Frivolous Return Program.

Direct any questions as to whether a claim is being asserted under IRC § 7433 and should be processed under these procedures to Area Counsel.

If an administrative claim is submitted to the approving official, Collection personnel involved with the collection action may be asked to prepare a memo explaining the facts of the case. This should include any documentation which confirms or contradicts the taxpayer’s statements.

When a claim is approved, prepare the following:

Forward the original FMS Form 197 to the taxpayer for signature under cover of Letter 2733.

The approving official will sign FMS Form 197 when it is received from the taxpayer.

Send the taxpayer a copy of the signed FMS Form 197.

Use Letter 2734 to forward the original forms described above to the Department of the Treasury, Judgment Fund Branch, Financial Management Service, 3700 East-West Hwy, Room 6E15, Hyattsville, MD 20782.

Keep a copy of the forms sent to the Judgment Fund Branch in the file. Record any information received from FMS regarding payment to the taxpayer on ICS.

Advisors, with the approval of the Advisory Group Manager, should inform the manager of the employee named in the damage claim that a claim of unauthorized collection action has been received. Follow up contact will be made to advise the manager of the final results of the investigation of the claim.

Provide copies of supporting documentation obtained during the investigation of the claim to the employee's manager.

Discussions regarding the findings will be held by the employee’s immediate supervisor and the employee.

The employee's manager will determine if NTEU representation is necessary.