Civil damages allowed for reckless or intentional disregard of internal revenue laws

(a) Increase in amount of damages (1) In general Section 7433(b) of the Internal Revenue Code of 1986 is amended by striking $1,000,000 ($100,000, in the case of negligence) and inserting $5,000,000 ($500,000, in the case of negligence). (2) Adjustment for inflation Section 7433 of such Code is amended by adding at the end the following new subsection: (f) Adjustment for inflation In the case of any calendar year after 2025, the $5,000,000 and $500,000 amounts in subsection (b) shall each be increased by an amount equal to— (1) such dollar amount, multiplied by (2) the cost-of-living adjustment determined under section 1(f)(3) for such calendar year, determined by substituting calendar year 2023 for calendar year 2016 in subparagraph (A)(ii) thereof. If any amount as increased under the preceding sentence is not a multiple of $500, such amount shall be rounded to the next lowest multiple of $500.. (b) Extension of time To bring action Section 7433(d)(3) of the Internal Revenue Code of 1986 is amended by striking 2 years and inserting 5 years. (c) Effective date The amendments made by this section shall apply to actions of employees of the Internal Revenue Service after the date of the enactment of this Act.