CIVIL DAMAGES FOR COLLECTION ACTIONS.

SEC. 3102. CIVIL DAMAGES FOR COLLECTION ACTIONS. (a) Extension to Negligence Actions.— (1) In general.— Section 7433 (relating to civil damages for certain unauthorized collection actions) is amended— (A) in subsection (a), by inserting “, or by reason of negligence,” after “recklessly or intentionally”; and (B) in subsection (b)— (i) in the matter preceding paragraph (1), by inserting “($100,000, in the case of negligence)” after “$1,000,000”; and (ii) in paragraph (1), by inserting “or negligent” after “reckless or intentional”. (2) Requirement that administrative remedies be exhausted.— Paragraph (1) of section 7433(d) is amended to read as follows: “(1) Requirement that administrative remedies be exhausted.— A judgment for damages shall not be awarded under subsection (b) unless the court determines that the plaintiff has exhausted the administrative remedies available to such plaintiff within the Internal Revenue Service.”. (b) Damages Allowed in Civil Actions by Persons Other Than Taxpayers.— Section 7426 is amended by redesignating subsection (h) as subsection (i) and by adding after subsection (g) the following new subsection: “(h) Recovery of Damages Permitted in Certain Cases.— “(1) In general.— Notwithstanding subsection (b), if, in any action brought under this section, there is a finding that any officer or employee of the Internal Revenue Service recklessly or intentionally, or by reason of negligence, disregarded any provision of this title the defendant shall be liable to the plaintiff in an amount equal to the lesser of $1,000,000 ($100,000 in the case of negligence) or the sum of— “(A) actual, direct economic damages sustained by the plaintiff as a proximate result of the reckless or intentional or negligent disregard of any provision of this title by the officer or employee (reduced by any amount of such damages awarded under subsection (b)); and “(B) the costs of the action. “(2) Requirement that administrative remedies be exhausted; mitigation; period.— The rules of section 7433(d) shall apply for purposes of this subsection. “(3) Payment authority.— Claims pursuant to this section shall be payable out of funds appropriated under section 1304 of title 31, United States Code.”. (c) Civil Damages for IRS Violations of Bankruptcy Procedures.— (1) In general.— Section 7433 (relating to civil damages for certain unauthorized collection actions) is amended by adding at the end the following new subsection: “(e) Actions for Violations of Certain Bankruptcy Procedures.— “(1) In general.— If, in connection with any collection of Federal tax with respect to a taxpayer, any officer or employee of the Internal Revenue Service willfully violates any provision112 STAT. 731 of section 362 (relating to automatic stay) or 524 (relating to effect of discharge) of title 11, United States Code (or any successor provision), or any regulation promulgated under such provision, such taxpayer may petition the bankruptcy court to recover damages against the United States. “(2) Remedy to be exclusive.— “(A) In general.— Except as provided in subparagraph (B), notwithstanding section 105 of such title 11, such petition shall be the exclusive remedy for recovering damages resulting from such actions. “(B) Certain other actions permitted.— Subparagraph (A) shall not apply to an action under section 362(h) of such title 11 for a violation of a stay provided by section 362 of such title; except that— “(i) administrative and litigation costs in connection with such an action may only be awarded under section 7430; and “(ii) administrative costs may be awarded only if incurred on or after the date that the bankruptcy petition is filed.”. (2) Conforming amendment.— Subsection (b) of section 7433 is amended by inserting “or petition filed under subsection (e)” after “subsection (a)”. (d) Effective Date.— The amendments made by this section shall apply to actions of officers or employees of the Internal Revenue Service after the date of the enactment of this Act.