I don’t know if Suzanne Jean McCrory, T. C. Memo. 2023-98, filed 8/1/23, is a devotee of the I Ching, but she certainly has followed the oft-reiterated injunction therefrom first above-written at the head hereof (as my expensive colleagues would say). With the fruitless years behind her, and the apparently hopeless years before her, Suzanne Jean kept volleying those Forms 211 at the Ogden Sunseteers, while Chief Whistler John W. (“Hoppin’  John”) Hinman’s myrmidons gave her the Mandy Mobley Li treatment.

This time she fired off a salvo of seven (count ’em, seven), and she finally hit the jackpot. She got a post-sequester $1694.31 for the consolidated bunch. I think she’s still out of the money when you consider the postage for all the predecessor applications. So Suzanne Jean threw in sixty Georges out of her winnings and petitioned.

IRS asks Judge Emin (“Eminent”) Toro to toss Suzanne Jean for want of jurisdiction, and incidentally to overrule Lippolis because it conflicts with Li, the Ogden Sunseteers’ get-out-of-work-free case. For the backstory on Lippolis, see my blogpost “The $2,000,000 Misunderstanding,” 11/20/14. IRS claims the award to Suzanne Jean was based upon Section 7623(a) (discretionary, hence nonreviewable), because the Section 7623(b)(5) $2 million predicate was not attained.

The Final Award Letter from the OS wasn’t a model of clarity.

“The Decision Letter listed all seven claim numbers in the ‘Re:’ line and stated that ‘[the WBO] has made a final decision that you are entitled to an award of $1,694.31.’ The Decision Letter did not identify which claim numbers the award related to, but explained the award computation in an attached Determination Report. The Report, also listing all seven claim numbers, stated that the ‘[f]inal tax, penalties, interest, and other amounts collected based on information provided by Whistleblower’ were ‘$179,672.20’ and that the recommended award percentage was 1%, subject to a modest reduction under the Budget Control Act of 2011, Pub. L. No. 112-25, 125 Stat. 240. The Report cited section 7623(b)(2) to justify the amount of the award and did not analyze the claim numbers individually.” T. C. Memo. 2023-98, at p. 4. (Footnote omitted, but it says the preliminary report said the same.).

So the Li toss, where the OS do nothing, is not in play here, because the OS did collect and did make an award. But only Section 7623(b) awards are subject to Tax Court review, and those awards must scale the $2 million/$200K minima of Section 7623(b)(5). Section 7623(a) awards need scale no such, but are nonreviewable. Of course, the label put on the award doesn’t determine its nature.

“As we have already noted, the D.C. Circuit held in Li that this Court lacks jurisdiction to review a threshold rejection issued by the WBO because, in such a case, the IRS takes no action with respect to a whistleblower’s claim. Li v. Commissioner, 22 F.4th at 1017. But the D.C. Circuit recently confirmed that our Court does have jurisdiction when the IRS proceeds with an action related to a whistleblower’s information and nevertheless declines to grant an award under section 7623(b). Lissack v. Commissioner, 68 F.4th at 1321. As the Commissioner’s Motion points out, the latter situation is analogous to one in which the IRS issues an award pursuant to section 7623(a) after proceeding with an action based on a taxpayer’s information and collecting proceeds. See Lippolis, 143 T.C. at 396 n.2 (observing that, when the WBO grants an award under section 7623(a), it implicitly denies an award under section 7623(b)). Thus, accepting the Commissioner’s own analogy, Lissack contradicts the position advocated in the Motion. Moreover, neither Li nor Lissack addressed specifically this Court’s precedent on the jurisdictional status of the monetary thresholds of section 7623(b)(5) or cast any doubt on that precedent.” T. C. Memo. 2023-98, at p. 7.

For the backstory on Lissack, see my blogpost “A Piece of the Action – Part Deux,” 8/17/21. And again, in the interest of full disclosure, Mr. Lissack was formerly a client of mine, many years ago and in an unrelated matter.

So Tax Court precedent, that the $2 million/$200K hurdles are affirmative defenses to a Section 7623(b) claim, and not jurisdictional (shades of Myers and Boechler, P. C.), means IRS needs to answer Suzanne Jean’s petition, and plead and prove the affirmative defenses.

Suzanne Jean is in line for the first Fighting Joe Insinga Memorial Award.