The Ogden Sunseteers have outdone themselves. It’s true the original Form 211 from Richard E. Lacey II, 153 T. C. 8, filed 11/25/19, was so scanty that the OS didn’t even send it to an operating division of IRS for a look-see, and Rich doesn’t dispute that.

“Mr. Lacey does not contend that his first submission was adequate but rather explains that he expected to supplement his information after the IRS began considering his claim.  In effect, he acknowledges that his first submission was, taken alone, properly rejected, so we need not evaluate any further the …rejection per se.”  153 T. C. 8, at p. 39.

And that Obliging Jurist Judge David Gustafson obliges me by beating up on a pet peeve of mine: “and/or.” IRS’ first bounce letter used that spurious locution.

“However, we note an imprecision in the letter, resulting from its use of ‘and/or’–i.e., it held that the claim ‘was speculative and/or did not provide specific or credible information’.  (Emphasis added.)  Admittedly, these two alternatives overlap, but the use of ‘and/or’ allows the writer to avoid specifying. Was there one reason the claim was rejected?  If so, which one?  Or were there two reasons?  If we look at the staff recommendations that preceded the decision, but see Chenery II, 332 U.S. at 196, they give no help, since one says ‘and/or’ and the other says ‘or’.  It is unclear how we should review the WBO’s multiple-choice letter… but we are relieved of that task by subsequent events–Mr. Lacey’s concession that his first submission was properly rejected and the second submission and the operative rejection….” 153 T. C. 8, at pp. 39-40.

But then Rich hired a lawyer, who asked for a clarification. He got a form letter that said they’d considered the “additional information” (except there wasn’t any), and bounced it. Whereupon said lawyer (who doesn’t appear for Rich in this litigation) sends in a 21 (count ‘em, 21) page “brief,” detailing the delictions of BP, where Rich was formerly employed, in the Deepwater Horizon oil-spill and cover-up.

The Ogden Sunseteers bounced that as well. True, it contained public info, but the 2018 amendment to the IRM says “Claims submitted with publicly available information must still be considered, regardless of the whistleblower’s firsthand knowledge of the situation.” IRM pt. 25.2.1.3.3(3) (Jan. 11, 2018). I said it a long time ago: the info may be public, but if the blower doesn’t connect the dots, then IRS will never be the wiser.

However, pore l’il ole Tax Court can’t review IRS’ determination to examine or pursue, nor order IRS to do anything. All Tax Court can do is review the OS’ determination (or denial, or rejection: they use these words interchangeably, to Judge Gustafson’s dismay) that the submission lacks merit to such an extent that they won’t send it to an operating branch to evaluate.

“Mr. Lacey does not challenge a decision by IRS examination personnel declining to audit BP’s returns on the basis of his information (since no such decision was ever made), nor does he challenge a decision by IRS collection personnel declining to attempt to collect from BP tax liability arising from his information (since no such decision was ever made).  He does not ask us to review any act by those examination and collection personnel or to give any direction to those examination and collection personnel.  Rather, Mr. Lacey challenges action by the WBO–i.e., its declining to refer his claim for substantive consideration but instead ‘rejecting’ it on the grounds that it failed to meet minimum standards for consideration.” 153 T. C. 8, at p. 33.

And Tax Court has jurisdiction to review that rejection for abuse of discretion. Well, no proceeds were collected, right? But if the Ogden Sunseteers bounced every application, without sending it to an operating branch, on the grounds that no proceeds were collected (since those charged with collecting never saw the info), then they would be immune from judicial review.

“Hypothetically, if the WBO were to reject reflexively by return mail all whistleblower claims–a clear abuse of its discretion–it could thereafter defend every case with the irrefutable contentions that no administrative or judicial action had been commenced or continued and that no proceeds had been collected on the basis of the whistleblower’s information.  Of necessity, those contentions would always be factually true, but such reflexive rejection by the WBO would be arbitrary–and, if arbitrary, then an abuse of discretion that we must reverse.” 153 T. C. 8, at p.36.

But the administrative record never got to Judge David Gustafson, so he doesn’t know what memos the Ogden Sunseteers wrote, or anything else. Their letters are as scanty as Rich’s original Form 211.

Rich wants remand, but it’s too soon for that. IRS wants summary J, but that’s a non-starter. Let’s see the administrative record, and let the parties tell us how to proceed.

Judges Gale, Lauber, Ashford, Urda, Copeland, and Jones agree. Judge Paris sits this one out.

Ex-Ch J Michael B (“Iron Mike”) Thornton concurs: “Whether the Whistleblower Office actually abused its discretion in rejecting the claim is a question that remains open for another day, once the complete administrative record is before the Court.  On that understanding, I concur with the opinion of the Court.” 153 T. C. 8, at p. 46; Judges Gale, Marvel, Morrison, Kerrigan, Lauber, Urda, and Copeland are down with that.

Judge Patrick J. (“Scholar Pat”) Urda concurs, lecturing Judge Buch and the dissenters that Tax Court has jurisdiction over more than the mere amount of an award. “The dissent notes that a whistleblower cannot qualify for an award unless the IRS institutes an administrative or judicial action and collects proceeds.  The dissent then concludes that we have no choice but to grant summary judgment to respondent here because there was no action and there were no proceeds…. With due respect, the dissent is incorrectly conflating the requirements for a whistleblower to obtain an award under section 7623(b)(1) with our review under subsection (b)(4).” 153 T. C. 8, at pp. 47-48. Judges Gale, Gustafson, Lauber, Ashford, and Copeland agree with all of Scholar Pat’s dissertation; Judge Jones only likes Part I.

But Judge Buch isn’t buying. And Ch J Maurice B (Mighty Mo”) Foley, Judges Nega, and Pugh agree. No proceeds, no award, nothing to review.

Taishoff says the dissenters are wrong. Yes, if the Ogden Sunseteers find the whole submission is so vague or off-the-wall as to be a waste of time, they can and should bounce it out of hand. But if there’s any reasonable chance there’s something there, even if in plain sight, they should buck it on to an operating division for a look-see. If operating (examination, CID, collection, whichever) says “no go,“ game over. But the Ogden Sunseteers have no freewheeling mandate to decide there’s nothing for an operating branch to look at. It’s the operating branch personnel who do the examining, investigating, collecting, and it’s they who decide whether or not to try to collect. In this case the Ogden Sunseteers may have short-circuited the process. So let’s have a show-and-tell with the administrative record.

Now Rich may or may not have anything. But there maybe might could be just enough for Examination or some operating branch to take a quick peek.