112 STAT. 730 PUBLIC LAW 105-206-^ULY 22, 1998 made by subsection (c), services performed) more than 180 days after the date of the enactment of this Act. 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. Applicability. " (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 provision
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