Ogden Sunseteer obstructionism got a boost from DC Cir’s shootdown of Mandy Mobley Li, another pro se non-litigated case that resulted in a travesty. Now the OS are trotting out Section 6103 to stall discovery in Whistleblower 972-17W, 159 T. C. 1, filed 7/13/22. But Judge Emin (“Eminent”) Toro isn’t buying. 17W has been scuffling with the OS for four (count ’em, four) years over the admin record. IRS will hand over some redacted stuff, but claims sacred taxpayer info bars the rest.

No doubt the stuff here is Section 6103 taxpayer info; no doubt the IRS conducted proceedings and got money, although they claim 17W didn’t help. And no doubt the info sought is “in connection with” determining as taxpayer’s civil or criminal tax liability. So no doubt 17W crossed the Li threshold-declination barrier.

But when it comes to “goofy,” IRS counsels’ contortions are worth reading.

“Based on certain statements in Li, one might argue that all the elements of section 7623(b)(1)—including the requirement that any action be in fact ‘based on the whistleblower’s information’—are jurisdictional. But that’s not what the D.C. Circuit decided in Li; rather, its holding is confined to threshold rejections in which the IRS takes no action. See Li v. Commissioner, 22 F.4th at 1017. A case like this one,  where the IRS has both acted and collected proceeds, raises jurisdictional considerations not present in Li.

“Specifically, if we were to read Li as requiring our Court to make a factual determination that the IRS proceeded against a target and collected proceeds from that target ‘based on’ the whistleblower’s information simply to establish our jurisdiction over the appeal of the WBO decision, then every case in which the WBO denies a claim on the ground that the information provided by the whistleblower was not useful to the IRS would require a full determination of the merits before we would know whether we had jurisdiction to begin with. Put a different way, if our jurisdiction to review the WBO’s decision not to make an award in a case that involved both an examination of the taxpayer and the collection of proceeds exists only if it turns out (contrary to the WBO’s conclusion) that the recovery was in fact ‘based on’ the whistleblower’s information, then (in cases involving the fact pattern now before us) the whistleblower would win on the merits in virtually every case over which we have jurisdiction (except perhaps those subject to section 7623(b)(3)), and we would have no jurisdiction in virtually every case that the whistleblower would otherwise lose on the merits. See I.R.C. § 7623(b)(1) (providing that if the Secretary proceeds with an action based on the whistleblower’s information, the whistleblower ‘shall’ receive an award).” 159 T. C. 1, at p. 9.

There’s a lot more, including without in any way limiting the generality of the following, a dictionary chaw, a discussion of what “in connection with” means, where it begins and ends, the legislative history of tax whistleblowing, “somber reasoning and copious citation of precedent” from DC Cir and the Supremes.

In the end, IRS has to fork over.