This section covers the types of civil actions that may be brought against the United States by persons other than taxpayers under section 7426.

Section 7426(a)(1) authorizes a suit directly against the United States by a third person claiming that the Government wrongfully levied upon such person’s property to satisfy the tax liability of another. Wrongful, as used in this section, refers to a proceeding against property that is not the taxpayer’s. In general, if a levy has been made on property, or property has been sold pursuant to a levy, any person other than the taxpayer who claims an interest in or lien on such property, may bring a civil action against the United States.

An action under section 7426 may be brought without regard to whether the property has been surrendered to or sold by the Service. A third person may not bring a wrongful levy action before the Service has in fact levied upon the property.

The remedies provided by section 7426 are the exclusive means of redress for actions that may be brought under this section. A third party may not bring a 28 U.S.C § 2410 quiet title action, which may have a longer (six-year) period of limitation, to recover wrongfully levied property.

The injunctive relief afforded by section 7426(b)(1) is available:

If the court’s determination is in favor of the third party, typically the injunction is either made permanent (if, for example, the property was not yet surrendered to the Service) or is continued until the levy is released and the specific property is returned to the third person.

If the court determines the Service’s levy is wrongful, the court may under section 7426(b)(2):

Where a third party recovers a money judgment, interest at the rate set by section 6621 is allowed from the date the Service received the money wrongfully levied upon to the date of payment of such judgment. Money wrongfully levied upon is "received" at the time the Government acquired possession of such money.

Section 7426(h) authorizes the payment of actual, economic damages incurred by a third party in a wrongful levy suit if there is a finding that an officer or employee recklessly, intentionally, or negligently disregarded a provision of the Code. The third party must exhaust administrative remedies under the same rules set forth in section 7433(d).

Section 7426(a)(2) provides that if surplus proceeds have been realized from the sale of property by the United States pursuant to a levy, any person (other than the taxpayer) who claims an interest in or lien upon such property junior to the lien or interest of the United States, and claims to be legally entitled to all or part of such surplus proceeds, may bring an action against the United States in a district court of the United States.

"Surplus proceeds" are those in excess of the amount necessary to satisfy the tax liability giving rise to the levy and the expenses of the levy sale. Once a taxpayer’s liability is satisfied, the Government’s retention of surplus proceeds is wrongful as to the person legally entitled to them.

Section 7426(b)(3) provides that if the court determines that the interest or lien of any party to an action under section 7426 was transferred to the proceeds of sale or property sold pursuant to a levy, the court may grant a judgment against the United States in an amount equal to all or any part of the amount of the surplus proceeds of such sale. The relief available under this section may be granted only in cases brought under section 7426(a)(2).

Section 7426(a)(3) was enacted to provide that if property has been sold pursuant to an agreement described in section 6325(b)(3), any person (including the taxpayer) who claims to be legally entitled to all or any part of the amount held as a fund pursuant to such agreement, may join the Government in a civil action to assert a claim to those proceeds.

Section 6325(b) permits the issuance of a certificate of discharge where property subject to a tax lien is sold and, under an agreement with the Service, the proceeds from the sale are held as a fund subject to the liens and claims of the United States in the same manner, and with the same priority, as the liens and claims on the discharged property. This provision was instituted to aid in the disposition of property where a dispute exists among competing lienors, including the United States, concerning their rights to specific property.

Any person including the taxpayer may bring an action under this provision whether or not such person was a party to the agreement described in section 6325(b)(3).

Section 7426(b)(4) provides that if the court determines that a party has an interest in or a lien upon an amount held as a fund pursuant to an agreement providing for the proceeds of sale of property to be substituted for the property, the court may grant a judgment in an amount not in excess of the substituted sale proceeds.

If a certificate of discharge is issued to any person under section 6325(b)(4) with respect to any property, such person may, within 120 days after the day on which such certificate is issued, bring a civil action against the United States for a determination of whether the value of the interest of the United States (if any) in such property is less than the value determined by the Service. No other action may be brought by such person for such a determination.

The following covers the miscellaneous procedural matters related to civil actions brought against the United States by persons other than taxpayers.