I was poking around in the Internal Revenue Manual (IRM) and came across instructions to IRS personnel respecting the handling of 26 USC § 7433 exhaustion of administrative remedy damage claims:

“25.3.3.5.2  (08-28-2006)
“Evaluation of a Claim for Damages Under IRC § 7433″

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

Would you look at that! No wonder I have several stories of people who sent in a notice of intent to sue based on my Calling Off the Dogs package because of an IRS levy that got a check for the full amount the next month. Apparently, when the IRS does their job they complete the initial review in 30 days like the IRM says too.

When no response is received from the IRS by those who send a claim resulting from damages caused by an IRS levy it may be evidence that somebody at the IRS is messing up. Of course, there is always the possibility that whoever was attempting to exhaust their administrative remedies just did it poorly. Reading on in IRM 25.3.3.5.2:

“2. Open an OI on ICS under 101 - Claim Other. Review the closed files for any prior claims.”

Keep this in mind when you send in an administrative claim for damages under § 7433; they are going to be reviewing your history. Reading further in IRM 25.3.3.5.2:

“3. The statutory elements contained in IRC § 7433 must be applied to each processable claim.”

Simply put; you must address each and every aspect of both § 7433 and the regulation 26 CFR 301.7433-1 in your administrative claim. You have to treat it like you would a jury instruction or a civil complaint. They want to know if you have any litigation capability. Continuing from IRM 25.3.3.5.2(3):

“In determining whether a claim is administratively allowable the reviewer must determine whether:

“A. an officer or employee of the IRS intentionally, negligently, or recklessly disregarded any legal or regulatory provision of the Internal Revenue Code in connection with the collection of any federal tax ; and

“B. the taxpayer sustained direct, economic damages as a result.”

As the old saying goes, to be forewarned is to be forearmed. Here they are breaking down what the elements of a 26 USC § 7433 claim are for you. Address the above issues and you should be good to go. Reading further in IRM 25.3.3.5.2:

 

“4. The facts and circumstances of each case must be evaluated. The reviewer must determine if the alleged infraction did, in fact, take place.”

If you are lazy respecting point 4 above you will make it harder for the one doing the evaluation to determine whether there really are facts that warrant the claim. If you make it harder to evaluate the factual basis of the claim, you are just making it easier for the evaluator to rule against you. On the other hand, if you pay attention to 26 CFR 301.7433-1(e)(2)(ii) & (iii), included in my Calling Off the Dogs package, then you will have included the grounds, in reasonable detail, for the claim and you will have included copies of any available substantiating documentation or correspondence with the Internal Revenue Service; and, you will have included a description of the injuries incurred by you when you filed the claim. Also, you will have included copies of any available substantiating documentation or evidence. When you do this you make it easy for the evaluator to do the next part of IRM 25.3.3.5.2(4):

“… determine whether or not the infraction was a reckless, intentional, or negligent disregard of the law.”

Reading further in IRM 25.3.3.5.2 (with my emphasis added):

“5. 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.”

Don’t be a dunderhead! This is telling us to address in our administrative claim the statute of limitation. We need to just do it and do it in an intelligent manner. If you think you are running late you better come up with an element of the claim that was discovered later that would extend the two year statute of limitations. If you are unwilling to do this, maybe better not to waste your time writing a claim. Let’s remember the law does not favor those who sleep on their rights and make it a point not to sleep on ours and remember to get our claims in timely.

“6. Certain criteria guide the amount of an administrative settlement, under this section. For example:

“A. the amount of the award is to be reduced by the damages that reasonably could have been avoided by the taxpayer;

“B. only actual, direct economic damages are recoverable in an administrative claim. No litigation or administrative costs are recoverable in an administrative claim. To the extent that any costs are recoverable under § 7433, such costs are recoverable only in a court proceeding; and

“C. the actual, direct economic damage reimbursement cannot exceed $1,000,000 ($100,000 in the case of negligence).”

I’ve been telling people all along that it is possible to get a check for damages without going to court. There it is in black and white; it is possible to get a check for damages administratively! I suspect that in the entire history of the existence of 26 USC § 7433 that no one has ever gotten a check for damages; that is, unless a relative or close friend to an IRS agent got one. Why not do a super job of writing an administrative claim and be the first one to get a check for damages on an administrative basis? Continuing in IRM 25.3.3.5.2:

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

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

See, if you do your job and write a good administrative claim; and they do their job and review and approve your claim, there are going to be some highly educated eyeballs examining your work of art administrative claim. This is why it is a good idea to get my Calling Off the Dogs package and study up on the use of 26 USC § 7433 before writing your administrative claim and attempting to exhaust your administrative remedies.

Follow me on Twitter.com/legalbear See you there.

 

 

taxes