U.S. Code » Title 26 » Subtitle Subtitle F— Procedure and Administration › Chapter CHAPTER 76— JUDICIAL PROCEEDINGS › Subchapter Subchapter B— Proceedings by Taxpayers and Third Parties

26 U.S.C. § 7434

Civil damages for fraudulent filing of information returns

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(a) In general

If any person willfully files a fraudulent information return with respect to payments purported to be made to any other person, such other person may bring a civil action for damages against the person so filing such return.

(b) DamagesIn any action brought under subsection (a), upon a finding of liability on the part of the defendant, the defendant shall be liable to the plaintiff in an amount equal to the greater of $5,000 or the sum of—(1) any actual damages sustained by the plaintiff as a proximate result of the filing of the fraudulent information return (including any costs attributable to resolving deficiencies asserted as a result of such filing),(2) the costs of the action, and(3) in the court’s discretion, reasonable attorneys’ fees.(c) Period for bringing actionNotwithstanding any other provision of law, an action to enforce the liability created under this section may be brought without regard to the amount in controversy and may be brought only within the later of—(1) 6 years after the date of the filing of the fraudulent information return, or(2) 1 year after the date such fraudulent information return would have been discovered by exercise of reasonable care.(d) Copy of complaint filed with IRS

Any person bringing an action under subsection (a) shall provide a copy of the complaint to the Internal Revenue Service upon the filing of such complaint with the court.

(e) Finding of court to include correct amount of payment

The decision of the court awarding damages in an action brought under subsection (a) shall include a finding of the correct amount which should have been reported in the information return.

(f) Information return

For purposes of this section, the term “information return” means any statement described in section 6724(d)(1)(A).

(Added Pub. L. 104–168, title VI, § 601(a), July 30, 1996, 110 Stat. 1462; amended Pub. L. 105–206, title VI, § 6023(29), July 22, 1998, 112 Stat. 826.)Editorial NotesPrior Provisions

A prior section 7434 was renumbered 7437 of this title.

Amendments

1998—Subsec. (b)(3). Pub. L. 105–206 substituted “attorneys’ fees” for “attorneys fees”.

Statutory Notes and Related SubsidiariesEffective Date

Pub. L. 104–168, title VI, § 601(c), July 30, 1996, 110 Stat. 1462, provided that: “The amendments made by this section [enacting this section and renumbering former section 7434 as 7435 of this title] shall apply to fraudulent information returns filed after the date of the enactment of this Act [July 30, 1996].”

Notes of Decisions
Cited in 159 cases (85 in the last 5 years), 1999–2026 · leading case: Mikulski v. Centerior Energy Corp., 501 F.3d 555 (6th Cir. 2007).
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Mikulski v. Centerior Energy Corp., 501 F.3d 555 (6th Cir. 2007). · cites it 4× “In July 1996, Congress enacted 26 U.S.C. § 7434 as part of the Taxpayer Bill of Rights 2, Pub.”
Leon v. Tapas & Tintos, Inc., 51 F. Supp. 3d 1290 (S.D. Fla. 2014). · cites it 7× “205 (Count III), misclassified Plaintiff in paying him as an independent contractor rather than a general employee in violation of the Florida Deceptive and Unfair Trade Practices Act (Count IV), and issued fraudulent tax returns based on this mis-classification in violation of…”
Derolf v. Risinger Bros. Transfer, Inc., 259 F. Supp. 3d 876 (C.D. Ill. 2017). · cites it 6× “Third, Plaintiffs allege that Defendants have violated the Internal Revenue Code, 26 U.S.C. § 7434 , by purposefully misclassifying Plaintiffs and others similarly situated to them as independent contractors and willfully filing fraudulent information returns.”
Jesus Cuellar-Aguilar v. Deggeller Attractions, Inc., 812 F.3d 614 (8th Cir. 2015). · cites it 7× “The workers further alleged that Deggeller fraudulently had under-reported the workers’ income to the Internal Revenue Service (“IRS”), in violation of 26 U.S.C. § 7434 . The district court dismissed the breach' of contract and tax *617 fraud claims under Federal Rule of Civil…”
Greenwald v. Regency Mgmt. Servs., LLC, 372 F. Supp. 3d 266 (D. Maryland 2019). · cites it 4× “In their five-Count Amended Complaint, Plaintiffs allege: willful violations of the Internal Revenue Code, 26 U.S.C. § 7434 (2018) (Count I); 7 improper deductions under the Maryland Wage Payment and Collection Law (the "MWPCL"), Md.”
Mould v. NJG Food Serv. Inc., 37 F. Supp. 3d 762 (D. Maryland 2014). · cites it 3× “, the Internal Revenue Code (“IRC”), 26 U.S.C. § 7434 , as well as for the common law torts of conversion and unjust enrichment.”
Kinesis Advert., Inc. v. Hill, 652 S.E.2d 284 (N.C. Ct. App. 2007). · cites it 2× “Under federal law, a person may bring a civil action against any person who willfully “files a fraudulent information return with respect to payments purported to be made to any other personf.”
Dean v. 1715 Northside Drive, Inc., 224 F. Supp. 3d 1302 (N.D. Ga. 2016). · cites it 6× “3 In addition to the employment-related claims, the plaintiff also claims that the defendants filed fraudulent tax returns by submitting returns classifying her as an “independent contractor” in violation of 26 U.S.C. § 7434 . The defendants’ answer to these employment-related…”
Martin Doherty v. Turner Broad. Sys., Inc., 72 F.4th 324 (D.C. Cir. 2023). · cites it 4× “Doherty sued Turner under 26 U.S.C. § 7434 for willfully filing fraudulent information returns (the W-2s in question) on his behalf.”
Sims v. Unation, LLC, 292 F. Supp. 3d 1286 (M.D. Fla. 2018). · cites it 2× “Count I is for recovery *1291 of overtime compensation under the FLSA; Count II is a collective claim for overtime pay for similarly situated individuals; Count III alleges a violation of 26 U.S.C. § 7434 (a), which creates a cause of action for willfully filing a fraudulent…”
Chin Hui Hood v. JeJe Enter., Inc., 207 F. Supp. 3d 1363 (N.D. Ga. 2016). · cites it 5× “Plaintiff also seeks civil damages for incorrect tax information filings under 26 U.S.C. § 7434 (2012). Defendants seek summary judgment on the grounds that the undisputed material facts show that Plaintiff was properly classified as an executive employee, exempt under 29 U.”
Bailey v. Shell W. E&P, Inc., 609 F.3d 710 (5th Cir. 2010). “Both Bailey and Ptasynski declined to join in the settlement, instead filing cases in the Northern District of Texas in 1997. 2. Bailey I Bailey sued Shell in 1997, asserting state law claims and one federal claim: that the 1099 tax forms Shell sent them were fraudulent and…”
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