In Uncategorized on 08/30/2013 at 21:44

Down at National Harbor yesterday, one of the TIGTA Deputy IG’s, R. David Holmgren, gave us an overview of what TIGTA does. I asked him after the lecture why TIGTA didn’t deal with the unending stonewalling by the Whistleblower Office, which seems to spend its waking hours denying claims when they’re not claiming that they haven’t determined anything. I cannot disclose his reply, here or elsewhere, as I asked informally.

See my blogposts “The Whistleblower Blows It”, 6/20/11, and “Qui Tam?” 9/12/12. In the former, I commented upon the case of William Prentice Cooper, III, 136 T.C. 30, released 6/20/11. So does STJ Daniel A. (“Yuda”) Guy, Jr., in blowing up would-be whistleblower Roy J. Meidinger, Docket No. 16513-12W, in a designated hitter filed 8/30/13.

The usual story: Roy turns up alleged skullduggery, sluggery and thuggery at a 501(c)(3) and drops a Form 211 on Bullet Bob Gardner, the retiring chief of the Whistleblower Squad. Remember Bullet Bob and his skirmishes with would-be Whistleblower Joe Insinga? No? Then check out my blogpost “A Voyage Of Discovery”, 3/30/12.

Here’s STJ Yuda’s story: “The Whistleblower Office forwarded petitioner’s information to the IRS Exempt Organizations Division and the Large Business and International Division. After reviewing petitioner’s original information and supplemental information, the Commissioner prepared Form 11369, Confidential Evaluation Report on Claim for Award, explaining his decision not to proceed with an administrative or judicial action against the taxpayers in question. … Robert Gardner, the Program Manager for the Whistleblower Office, sent a letter to petitioner stating that the information he provided did not result in the collection of any proceeds, and, therefore, he was not eligible for an award under section 7623.” Order, p. 2.

Roy claims IRS abused its discretion, but IRS counters with the Cooper case–no money, no award.

Roy comes back, claiming he had a contract with the IRS, and cites the Tucker Act, 28 USC §1491(a), and demands specific performance and binding arbitration.

Of course, that argument bites the dust. Judge Yuda says that Section 7623 controls Whistleblowing, and doesn’t go into the statutory language that places jurisdiction over Tucker Act claims with the Court of Federal Claims or the USDCs, but leaves out Tax Court.

Not surprisingly, Roy’s demand for relief doesn’t even get the usual “we ain’t got no equitable jurisdiction”, and anyhow Tax Court couldn’t order binding arbitration even if they did have equitable jurisdiction.

So Roy is tossed. “It is well settled that the threshold for a whistleblower award is the Commissioner’s collection of proceeds upon which an award can be based. That threshold not having been crossed here, petitioner is entitled to no award. There is no genuine issue as to any material fact, and we will dispose of this case in respondent’s favor on the basis of Cooper v. Commissioner, 136 T.C. at 601.” Order, at p. 3. (Footnote omitted).

OK, so as far as Tax Court is concerned, once IRS says there’s no money, that ends the Whistleblower’s relationship with IRS. To quote Mr. Kipling,  “If a year of life be lent her/If her temple’s shrine we enter/The door is shut/We may not look behind”.

Now lest I be misunderstood, I agree that the Courts’ role in reviewing administrative determinations by the Executive branch should be limited. We still have some vestige of a Constitutional separation of powers. There are places where courts cannot, and should not, go.

But the administrative agency here has its own check and balances, provided by the Legislative branch. There’s TIGTA, whose mission is “(T)o provide integrated audit, investigative, and inspection and evaluation services that promote economy, efficiency, and integrity in the administration of the internal revenue laws.”

Might could be y’all should take a look at how the Whistleblower Office is doing.

  1. Lew,

    You are so right about the IRS WBO.

    Question – How can the Tax Court grant a summary judgment in
    a 7623 case, when Rule 344 declares that a wb action is deemed to be “at issue” ?


    • I don’t believe it’s the WBO at fault. The fault lies with the field examiners who are the “experts” (supposedly) regarding genuinely bad actors. Seeing how few bad actors suffer at the hands of the IRS as a result of whistleblowers’ interventions, one can reasonably wonder how expert one must be to work at such an esteemed institution. No wonder the IRS can’t punch it’s way out of a figurative paper bag as flimsy as Darryl Issa and his Tea Party minions.


      • I would amend Sr. Saguaro’s comment in this fashion: “The fault lies with the EO Examination director and even more, the Chief Counsel’s Office, which has a vendetta against whistleblowers. If it’s a foregone conclusion that the Chief Counsel will with glee kill every whistleblower case that comes before the Tax Court — and considering the political price to be paid if a case were to proceed and some major institution, party, or law firm’s ox was to be gored — why bother with whistleblowers at all. The WBO is window-dressing to satisfy some cranky senators. If they really cared, the senators would amend Section 7263 by deleting the current one line of text and saying what the Tax Court can and cannot do, not as a nag to the Executive Branch, but as the only available, accessible court of law to ensure justice is served when whistleblowers take one, two, three, or more years to make their cases. Years when their paying work must suffer or in the worst case, be terminated. I suppose that makes too much sense in DC these days — and in the IRS, where it makes no sense at all.


    • “The fault, dear Al, is not in our WBO,
      But in ourselves, that we are underlings.”

      It’s the field experts who determine if there’s a case or not. WBO is just a paper-pusher. The field experts, sadly, are vulnerable to many detriments besides their own ignorance: wealthy, politically connected taxpayers, the giant law firms who represent them, and the infinitude of advisory councils and committees that also represent their interests. Oh yes, also the directors and managers who run the IRS, who are hair-trigger sensitive to the prevailing political winds and constellations of power, and who communicate how to serve the powerful with the least political fallout. And who can blame them? It’s called optimization.

      Sadly, that leaves precious little time or energy for small fry or deviants like whistleblowers, who don’t adequately perceive how expert the IRS is and how unnecessary and worthless their own lives and experiences are. Much easier to seek a summary judgment and quash the action than to make a cogent argument why taxes shouldn’t be collected when in fact they are owed.

      It’s not possible for the Tax Court to forever stick its head in the sand. The IRS regularly abuses its discretion, failing to investigate let alone prosecute substantial tax crimes, costing the US Treasury tens of billions of dollars of forgone revenues. Shouldn’t it be a little responsible for payback? I’m not one to champion Issa and his Tea Party Terrors, who did little more than display their own selfishness as applicants for controversial tax treatment, but in fact, in their small size and impotence, they are more like the rest of us than are those who work for the IRS, who take such a dim view of amateurs intruding on _their_ turf, who reserve for themselves the right to traduce the spirit of the law in the pursuit of personal career goals.

      At some point, the Tax Court must emerge from its shell, look around, and announce, “The will of Congress was not that we should be ineffectual, toadies to the IRS, but that we should ensure that taxes are fairly administered, that taxpayers and tax collectors act legally and justly, and that the issue of whistleblower rewards is parenthetical to more fundamental concerns which we cannot ignore and still do the job set forth for us by the representatives of the people.” That day is coming, soon.


  2. Issue is joined when respondent has filed and served its answer to the petition. But that doesn’t mean that a material question of fact (and the magic word is “fact”) exists. Roy apparently never alleged that IRS did get money as a result of his information. Thus, Judge “Yuda” Guy: “It is well settled that the threshold for a whistleblower award is the Commissioner’s collection of proceeds upon which an award can be based. That threshold not having been crossed here, petitioner is entitled to no award. There is no genuine issue as to any material fact, and we will dispose of this case in respondent’s favor on the basis of Cooper v. Commissioner, 136 T.C. at 601.” Order, at p. 3. Tax Court can’t review why IRS didn’t follow up, or how IRS followed up (if they did anything at all). The question is only did IRS get money as a result of the whistleblower’s information? The burden is on the whistleblower to plead and prove IRS did get money.


  3. See my earlier reply. The problem is with Congress. Section 7623 makes it clear that whistleblowers can only get paid out of what IRS actually collects–revenue neutral, y’know. If IRS hasn’t the resources (personnel) to sort out the ruffians and the pranksters, and lay hold of their ill-gotten gains, it’s up to Congress to supply the same. As it is, the WBO needs TIGTA oversight, to make sure WBO isn’t thwarting valid claims.


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