Letter 2732, Notification of Full or Partial Denial of Claim for Civil Damages, tells you the IRS denied all or part of the administrative claim you filed for damages. These claims arise under IRC Section 7433 for unauthorized collection actions, IRC Section 7432 for failure to release a lien, and IRC Section 7426(h) for wrongful levy damages. If only part of your claim was denied, you will receive Letter 2733 for the allowed portion at the same time.
There Is No Appeal
This is the part people do not expect. IRM 25.3.3 states it directly: if the claim is denied, there is no appeal. You cannot take a Letter 2732 to the IRS Office of Appeals. The remedy the statute provides is a lawsuit in federal district court.
The Deadline
The suit must be brought within two years from the date the right of action accrued, meaning when you had a reasonable opportunity to discover all the essential elements of the claim. That date is usually set by the underlying violation, not by the date of Letter 2732. If your claim sat with the IRS for a long time, much of the two years may already be gone.
What You Can Recover
In court, damages under Sections 7433 and 7426(h) are limited to actual, direct economic damages plus costs, capped at $1,000,000, or $100,000 if the IRS was merely negligent. You must have tried to mitigate your losses. The amount you sue for generally cannot exceed what you claimed administratively.
If you received Letter 2732, call us at (813) 229-7100. Check the two-year date before anything else.