Dist. Ct. did not err in dismissing plaintiffs’ action seeking tax refund under 26 USC section 7422, as well as damages under 26 USC section 7433, where: (1) claims arose out of 2003 IRS settlement with plaintiffs’ partner for payment of 1994 partnership income taxes; and (2) plaintiffs alleged that said taxes were subject to statute of limitations, and that IRS had failed to give them required notice of administrative proceeding focused on partnership’s tax liability. Plaintiffs could not proceed under section 7422(c) since plaintiffs never sent formal refund claim to IRS as required by tax code. Also, plaintiffs could not proceed under section 7433, since actions under that section are permitted for damages resulting from tax code violations only during collection process itself, and not for alleged improper tax assessments, as plaintiffs alleged here.
Federal 7th Circuit Court
Civil Court
Income Tax