The March 5 Federal register (Volume 67, Number 43; page 9929-9934) announces 26 CFR Part 301 [Reg-107366-00], which is a proposed rule to provide for a "Civil Cause of Action for Damages Caused by Unlawful Tax Collection Actions, Including Actions Taken in Violation of Section 362 or Section 524 of the Bankruptcy Code."⁽¹⁾

The first reason this caught my attention was because of the words "Caused by Unlawful Tax Collection Actions" and "Civil Cause of Action" used in the same sentence.

The words "Unlawful Tax Collection Actions" bring to mind coercion, fraud, intimidation and threat under color of official position. This, in turn, brings to mind the "deprivation of rights under color of law" statute (18 USC 242), which applies to government agents overstepping their authority:

"Whoever, under color of any law, statute, ordinance, regulation, or custom, willfully subjects any person in any State, Territory, or District to the deprivation of any rights, privileges, or immunities secured or protected by the Constitution or laws of the United States, . . . shall be fined under this title or imprisoned not more than one year, or both . . ."

Over the years, I have repeatedly asked elected officials a simple question: "Why are government officials not bound by the law?" That is, if an American citizen breaks the law and steals from others, men with guns come to hunt him down. Yet, government officials get a free pass to do the same thing. Shouldn’t government officials be held to a higher standard than the average citizen? After all, they are in a much better position to know exactly what the law is.

Apparently not. From the well published illegal antics of Bill Clinton to the thousands of well documented misdeeds of minor bureaucrats, it doesn’t seem to matter what they do or how many people they harm. In most cases, bureaucrats have immunity from prosecution for violating the law.

And so it is in this case. Herein, when an agent of the government violates the law, the people of the United States, as a whole, will pay the victim and the perpetrator will continue drawing a government paycheck.

Anyway, there is a proposed rule change at Treasury that could help some people. The proposed regulation relates to "civil causes of action for damages caused by unlawful collection actions of officers and employees of the IRS and the awarding of costs and certain fees. The proposed regulations reflect amendments made by the Taxpayer Bill of Rights and the Internal Revenue Service Restructuring and Reform Act of 1998. The proposed regulations affect all persons who suffer damages caused by unlawful collection actions of officers or employees of the IRS."

The proposed regulation would amended section 7433 of the Internal Revenue Code of 1986 by increasing the maximum amount of damages a taxpayer may be awarded for unlawful collection actions from $100,000 to $1,000,000.

Also, "reasonable administrative costs may be awarded to the prevailing party in an administrative proceeding brought by or against the United States in connection with the determination, collection, or refund of any tax, interest, or penalty under Title 26." Previously, taxpayers were generally not entitled to recover costs for administrative proceedings in connection with collection matters. The current regulations exclude such collection matters.

As with most proposed regulations, there is a period for comments and requests for a public hearing. "Consideration will be given to any written comments that are submitted timely (preferably a signed original and eight (8) copies) to the IRS. Alternatively, taxpayers may submit comments electronically to the IRS Internet at www.irs.gov/regs. All comments will be available for public inspection and copying."

Written comments and requests for a public hearing must be received by June 3, 2002. Send submissions to: CC:ITA:RU (Reg-107366-00), room 5226, Internal Revenue Service, POB 7604, Ben Franklin Station, Washington, DC 20044. Or, if you don’t trust postal delivery, submissions may be hand delivered to: CC:ITA:RU (Reg-107366-00), room 5226, Internal Revenue Service, 1111 Constitution Avenue NW., Washington DC.