Per the federal law provision, there are situations for which you can file a lawsuit against IRS like Taxpayers may sue to stop IRS from collecting if such a collection action is based on wrongful practices , or in case of refund disputes and failure by the agency to release any liens. But legal action is subject to very stringent requirements, including the requirement of fully exhausting all administrative remedies.
Situations Where You Can Sue the IRS
Here is a list of scenarios where taxpayers may have the right to sue the IRS:
|
Situation |
Details |
Relevant Code Section |
|
Wrongful Collection Actions |
Misconduct during tax collection, including harassment or reckless behavior. |
IRC § 7433 |
|
Refund Disputes |
Denial or unreasonable delay in processing a legitimate tax refund. |
28 U.S.C. § 1346(a)(1) |
|
Failure to Release a Lien |
The IRS does not remove a lien after the tax debt has been resolved. |
IRC § 7432 |
|
Third-Party Wrongful Levy |
The IRS seizes property belonging to someone else to satisfy another person’s tax debt. |
IRC § 7426 |
Common Reasons to Sue the IRS
Here are some common reasons taxpayers may file lawsuits against the IRS:
|
Reason |
Example |
|
Wrongful Levy or Seizure |
The IRS wrongly garnishes wages or seizes property not subject to tax debt. |
|
Denied Refund |
IRS refuses a refund claim, even when valid documentation is provided. |
|
Reckless Tax Collection |
IRS agents use harassment or threaten unnecessary penalties. |
|
Failure to Release a Lien |
The IRS does not remove a lien even after a tax balance is fully paid. |
FAQs About Suing the IRS
Q: Can I sue the IRS for pain and suffering?
A: The IRS cannot be sued for emotional distress/punitive damages. However, you have the right to sue for compensatory damages in cases based on certain types of abusive debt collection practices.
Q: Which court should I file my case if I sue the IRS?
A: It depends on your case:
- Use Tax Court for disputes over penalties or assessments.
- File in District Court for refund claims or monetary damages.
- Opt for the Court of Federal Claims for disputes exceeding $10,000.
Q: Can I sue for mistakes on my return?
A: Not directly. Most errors can be corrected by filing an amended return or resolving disputes through IRS administrative processes.
Unsure if you can sue the IRS? Contact us to discuss your rights, including wrongful collection, refund disputes, and lien issues!
