Opinion
20442-18W
10-16-2024
WHISTLEBLOWER 20442-18W, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER
Albert G. Lauber, Judge
This is a whistleblower award case under 7623(b)(4). On December 9, 2021, respondent filed a Motion for Summary Judgment (MSJ) contending that the denial of petitioner's claim for award was not an abuse of discretion. In so contending respondent urged (among other things) that "the IRS did not proceed with an administrative action against the [target] taxpayer based on the information provided by the Petitioner [because] the information did not substantially contribute to the examination." In advancing that argument respondent cited (among other things) Treasury Regulation section 301.7623-2(b)(1) (Regulation). It provides that the IRS "proceeds based on" the whistleblower's information "when the information provided substantially contributes to an action against [the target]."
Unless otherwise indicated, statutory references are to the Internal Revenue Code, Title 26 U.S.C, in effect at all relevant times, and regulation references are to the Code of Federal Regulations, Title 26 (Treas. Reg.), in effect at all relevant times.
This Court upheld the substantive and procedural validity of the Regulation in Lissack v. Commissioner, 157 T.C. 63 (2021), and our decision was affirmed by the U.S. Court of Appeals for the D.C. Circuit, 68 F.4th 1312 (D.C. Cir. 2023). In sustaining the Regulation's validity, both Courts applied the framework set forth in Chevron U.S.A., Inc. v. NRDC, 467 U.S. 837 (1984). On June 28, 2024, the U.S. Supreme Court overruled Chevron. See Loper Bright Enters. v. Raimondo, 144 S.Ct. 2244 (2024).
On July 2, 2024, the Supreme Court vacated the D.C. Circuit's judgment in Lissack and remanded the case for further consideration in light of Loper Bright. See Lissack v. Commissioner, S.Ct. No. 23-413, 2024 WL 3259664. On August 8, 2024, at the appellate court's direction, this Court returned the mandate in Lissack to the D.C. Circuit. The Lissack case remains pending before that Court.
On August 5, 2024, petitioner filed a First Supplement to his opposition to respondent's MSJ. In that filing petitioner contends that section 7623(b) contains no requirement that the whistleblower's information "substantially contribute" to an IRS recovery of proceeds, that the IRS has improperly imported this requirement from the Regulation, and that the Regulation is invalid. As noted above, the validity of the Regulation under the analysis prescribed by Loper Bright is currently pending before the D.C. Circuit.
In a status report filed September 12, 2024, the IRS seeks "an opportunity to brief its position" with respect to the arguments advanced in petitioner's First Supplement. We think it prudent to defer any further briefing on the MSJ until the D.C. Circuit has issued a supplemental opinion (or other ruling) in Lissack. We will accordingly hold the MSJ in abeyance for the time being.
In consideration of the foregoing, it is
ORDERED that respondent's Motion for Summary Judgment, filed at docket entry #60 on December 9, 2021, is held in abeyance pending further order of the Court.