Opinion
15366-20W
04-21-2023
SUZANNE JEAN MCCRORY, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER OF DISMISSAL FOR LACK OF JURISDICTION
Albert G. Lauber, Judge.
Petitioner seeks review of three Final Decisions of the IRS Whistleblower Office (WBO) rejecting her claims for an award under I.R.C. § 7623(a). On February 9, 2023, respondent filed a Motion to Dismiss for Lack of Jurisdiction in which he contends that the Tax Court lacks subject matter jurisdiction over this case because the IRS rejected petitioner's claims at the threshold. See Li v. Commissioner, 22 F.4th 1014 (D.C. Cir. 2022). For the same reasons we articulated in McCrory v. Commissioner, T.C. Memo. 2023-51, we agree with respondent and will dismiss this case for lack of jurisdiction.
Background
The following facts are derived from the parties' pleadings and respondent's Motion papers, including the Declarations and Exhibits attached thereto. In April 2020 petitioner filed with the WBO claims for award on three Forms 211, Application for Award for Original Information. These claims relate to tort judgments paid by tobacco or chemical companies to taxpayers (Targets). Petitioner makes various allegations regarding the treatment of the payments on Targets' income tax returns. Respondent represents that the only information petitioner attached to her Forms 211 consisted of publicly available news articles and court records.
In July 2020 the WBO acknowledged receipt of petitioner's claims and sent them to "classifiers" in the Small Business/Self-Employed operating division. The role of a classifier is to "determine whether the information should be forwarded for further review. Those claims not forwarded for further review can be rejected or denied based on [the classifier's] rationale for not forwarding the claim." Internal Revenue Manual (IRM) 25.2.1.3.1(1) (May 28, 2020) (explaining the "roles and responsibility of classification").
In each instance the classifier recommended that petitioner's claims be rejected. These recommendations were set forth in three separate Award Recommendation Memoranda that were completed in October 2020. In each Memorandum the classifier included a summary of petitioner's allegations followed by a recommendation to "Reject the Claim: Allegations are not specific, credible, or are speculative." Each classifier supplied a detailed basis for this recommendation.
The WBO agreed with the classifiers' recommendations, and none of petitioner's claims was forwarded to an IRS examination team for further review. The WBO communicated to petitioner that it had rejected her claims by letters dated October 2, 5, and 8, respectively. All three letters explained that her claims "ha[d] been rejected because the IRS decided not to pursue the information [she] provided." On November 2, 2020, petitioner petitioned this Court for review of the IRS's decisions.
Respondent filed a Motion to Dismiss for Lack of Jurisdiction on February 9, 2023. We directed petitioner to respond to the Motion by March 15, 2023. She filed no response by that date or subsequently.
Discussion
The Tax Court is a court of limited jurisdiction and may exercise jurisdiction only to the extent authorized by Congress. Judge v. Commissioner, 88 T.C. 1175, 1180-81 (1987); Naftel v. Commissioner, 85 T.C. 527, 529 (1985). We are without authority to enlarge upon that statutory grant. See Phillips Petroleum Co. & Affiliated Subs. v. Commissioner, 92 T.C. 885, 888 (1989). We nevertheless have jurisdiction to decide whether we have jurisdiction. McCrory v. Commissioner, 156 T.C. 90, 93 (2021).
Section 7623(b)(4) defines our jurisdiction in whistleblower award cases. Shands v. Commissioner, No. 13499-16W, 160 T.C., slip op. at 7 (Mar. 8, 2023). It provides that "[a]ny determination regarding an award under paragraph (1), (2), or (3) [of subsection (b)] may, within 30 days of such determination, be appealed to the Tax Court (and the Tax Court shall have jurisdiction with respect to such matter)." By its terms, the statute gives us jurisdiction only over "determination[s]" made under section 7623(b), which authorizes the IRS to make nondiscretionary awards.
Absent stipulation to the contrary, appeal of whistleblower award cases lies to the U.S. Court of Appeals for the D.C. Circuit. See § 7482(b)(1) (penultimate sentence); Kasper v. Commissioner, 150 T.C. 8, 11 n.1 (2018). In Li v. Commissioner, 22 F.4th 1014, the D.C. Circuit delineated this Court's jurisdiction to review cases (like this one) where the IRS has issued a threshold rejection of a whistleblower's claim. In Li, the WBO rejected a whistleblower's claim on the ground that the information she submitted was "vague and speculative." Id. at 1017. The WBO did not forward the claim to an IRS examination team for further review, and no action was taken against the target taxpayer.
The D.C. Circuit held that the Tax Court lacked jurisdiction in these circumstances because the IRS had made no "award determination" within the meaning of section 7623(b). Li v. Commissioner, 22 F.4th at 1017Ibid. As the court explained, "an award determination by the IRS [under section 7623(b)] arises only when the IRS 'proceeds with any administrative or judicial action described in subsection (a) based on in-formation brought to the Secretary's attention by [the whistleblower].'" Li v. Commissioner, 22 F.4th at 1017Ibid. (quoting § 7623(b)(1)). Be-cause "there was no proceeding . . ., the Tax Court had no jurisdiction to review the WBO's threshold rejection of [the claimant's] Form 211."
This case is on all fours with Li. IRS classifiers recommended that petitioner's claims be rejected because her "allegations are not specific, credible, or are speculative." Accepting the classifiers' recommendations, the WBO decided not to forward petitioner's information to an IRS examination team, and no action was taken against any Target on the basis of information that petitioner submitted. Because the IRS did not "proceed[] with any administrative or judicial action," the D.C. Circuit's decision in Li dictates that we grant respondent's Motion to Dismiss for Lack of Jurisdiction.
It is accordingly, ORDERED that respondent's Motion to Dismiss for Lack of Jurisdiction, filed February 9, 2023, is granted, and this case is dismissed.