157 T.C . No. 3

UNITED STATES TAX C OUR T

B OB B Y LEE R OGER S, Pe titione r v. C OM M ISSIONER OF INTER NAL REVENUE, R e sponde nt

Doc ke t No. 17985-19W
. File d August 2, 2021.

P subm itte d nine c la im s (c olle c tive ly , the c la im ) for a whistleblowe r award unde r I.R .C . se c . 7623 to the IR S W histleblowe r Offic e (W B O). The c la im a s se rte d tha t c e rta in individua

ls ha d c onspire d to c om

m it “ grand the ft through c o nve rsion” of the a sse ts of P’ s m othe r. Afte r re vie wing P’ s c la im , a c la ssifie r from

an IR S ope ra ting division re c om

m e nde d tha

t the c la im be re

je c te d be c a

use it fa ile d to m e e t thre shold c rite ria se t out in the

re gula tions unde r I.R .C
. se c . 7623. TheW B O the n issue d P a le tte r purporting to re

je c t the c la im on a n a lte rnative ground, sta

ting: “ T h e c la im

ha s be e n re

j e c te d be c a use the IR S de c ide d not to pursue the inform ation y ou provide d.” P tim e ly a ppe a le d to our C ourt unde r I.R .C . se c . 7623(b)(4). I.R .C . se c . 7623(b) provide s tha t we m ay re vie w whistleblowe r award de te rm inations whe n

c e rta in m one ta

ry thre sholds e sta

blishe d in I.R .C
. se c . 7623(b)(5)(A) (re lating to c la im s a ga inst individua ls) a nd (B ) (re lating to a ll c la im s) a

re sat isfie d. The re c ord in this c a se doe s not e sta blish whe the r the a c t ion he re satisfie s the se thre sholds.

Served 08/02/21-2- Afte r P’ s pe tition for re vie w , R file d a n a nswe r that

did not a ddre ss the m one t ary

thre sholds under I.R .C . se c . 7623(b)(5). R subse que ntly file d a

m otion for sum

m a ry judgm e nt, a

rguing tha

t the W B O’ s de te rm ination should be c la ssifie d a s a

re je c tion a nd did not re pre se nt a

n a buse of disc re tion. He ld: C onsiste nt with our holding in Lippolis v. C om m issione r, 143 T.C . 393 (2014), whic h c onside re d I.R .C
. se c . 7623(b)(5)(B ), the m one ta ry thre shold se t out in I.R .C
. se c . 7623(b)(5)(A) is not a jurisdic tiona l re quire m e nt, but ra the r c re a te s a n a ffirm a tive de fe nse tha

t m ust be ple a de d in the answe r and prove d by

R
. He ld, furthe r, be c a

use R did not ple a d

in his a nswe r that the a c tion he re fa ils to sa

tisfy the m one t ary

thre s holds unde r I.R .C
. se c . 7623(b)(5), tha

t s e c tion doe s not pre c l ude us from c onside ring the c a se on the m e rits. He ld, furthe r, whe n the W B O de te rm ine s tha t a whistleblowe r is not e ntitle d to a

n award, the re g ulations provide for two pote ntia l c ourse s of a c tion: TheW B O m ay re je c t the whistleblowe r’ s c la im or it m ay de ny the c la im ; fa ilure to follow one of the paths se t out in the re gula tions is a n a buse of disc re tion. He ld, furthe r, a lthough the W B O’ s le tte r purporte d to re je c t P’ s c la im , the ra tiona le inc lude d in the le tte r is a s soc iate d with a de n ia l (ra the r tha

n a re je c tion) unde r the re gula

tions. He ld, furthe r, give n the ra tiona le inc lude d in the W B O’ s le tte r, ne ithe r the le tte r a lone nor the le tte r c ouple d with thea dm inistra

tive re c ord provide s a

c o he re nt a c c ount of theW B O ’ s de te rm ination tha t is c onsiste nt with the

re gula tions; there fore , the W B O’ s de te rm ination c onstitute s a

n a buse of disc re t ion a

nd c annot be uphe ld on re v ie w . He ld, furthe r, the m e re involve m e nt of a c la ssifie r from

an IR S ope ra ting division in the W B O ’ s de te rm ination doe s not pre c lude this C ourt’ s re vie w of the de te rm ination.-3-

B obby Le e R oge rs, pro se . R obe rt J. B ra xton, Tim othy B
. He avne r, a

nd B artholom e wC ire nz a , for
re sponde nt.

OPINION
TOR O, Judge : Se c t ion 7623 1 provide s for a wards to individua

ls (c om m only
re fe rre d to a s whistleblowe rs) who submit inform ation to the Gove rnm e nt a

bout third pa rtie s who ha

ve unde rpa id the ir tax e s or othe rwise viola te d the inte rna l
re ve nue l aws. The Whistleblowe r Offic e (“ W B O” ) of the Inte rna l R e ve nue Se rvic e (“ IR S” ) ha s be e n e ntruste d with there s ponsibility of re v ie wing c l a im s unde r se c tion 7623 to dete rm ine whe the r a whistleblowe r is e ntitle d to a n a ward. The De pa rtm e n t of the Tre a sury

and the IR S hav e a dopte d re gula tions unde r
se c t ion 7623 tha

t d e sc ribe , am o ng othe r things, a c tions tha t the W B O is
e m powe re d to ta

ke whe n m aking a

ward de te rm inations, inc luding re je c tions a nd de nia ls of whistle

blowe r c la im s. In this c a se , we c onside r the e xte nt to whic h the W B O is c onstra ine d by the
re gula tions whe n it c om

m unic ate s a dve rse de c isions to whistle blowe rs.

1 Unle ss othe rwise note d, a ll se c tion re fe re nc e s a re to the Inte rna l R e ve nue C ode of 1986 in e ffe c t at a ll re le va nt tim e s, a

nd a ll R ule re fe re nc e s a

re to the Ta x C ourt R ule s of Pra c tic e and Proc e dure
.-4-

Spe c ific a lly , pe titione r, B obby Le e R oge rs, ha s a

ppe a le d, pursua

nt to
se c t ion 7623(b)(4), a de t e rm ination of theW B O tha t de c line s to gra

nt him an
award. R e sponde n t , the C om m issione r of Inte rna l R e ve nue (the “ C om m issione r” ), ha s file d a

m otion for sum

m ary judgm e nt unde r R

u le 121, a rguing tha

t the W B O

“ re je c te d” M r. R oge rs’ c la im and tha t this de te rm inat ion wa s c onsiste nt with the
re gula tory sc he m e and supporte d by the a dm inistra

tive re c ord. B ut the le tte r that the W B O se n t to M r. R oge rs purporte d to re je c t his c la i m

ba se d on a ra tiona le tha

t the re gula tions spe c ific a lly

a ssoc iat e with a

n a lte rnat ive a dve rse de te rm ination, a de nia l. Unde r long-e s ta

blishe d a dm i nistra

tive la w, we c an uphold the

W B O ’ s de te rm i nation only

on the grounds it a c tua lly re lie d on whe n m aking its de te rm i nation. Se e Ka spe r v. C om m issione r, 150 T.C . 8, 23-24 (2018) (c iting SEC v. C he ne ry

C orp. (C he n e ry

I), 318 U.S. 80, 93-95 (1943), a n d SEC v. C he n e ry C orp. (C he ne ry

II), 332 U.S. 194, 196 (1947)). A re vie w of the re c o rd he re le ave s
us una ble to c onc lude tha

t the de te rm inat ion re fle c te d in the W B O’ s le tte r wa s
c onsiste n t with there gula tions. Ac c ordingly , the W B O’ s de te rm i nation wa s a n
a buse o f its disc re tion, a

n d we the re fore m

u st de ny the C o m

m i ssione r’ s m otion.-5- B a c kground The fa c ts de s c ribe d be low a re drawn from

the pa rtie s ’ ple a dings a

nd m otion pa pe rs, inc luding thee xhibits a tta c he d the re to a

n d the a dm inistra

tive re c ord a s
c e rtifie d by

the C om m issione r. A. M r. R o ge rs’ Awa

rd Applic at ions In 2019, M r. R oge rs subm itte d nine Form s 211, Applic ation for Awa rd for Origina l Inform a tion, to the W B O, a long with c e rta i n atta c hm e nts. M r. R oge rs’ Form s 211 ide n t ifie d nine ta rge t taxpa y e rs--a ll individua

ls a nd e xte nde d fam ily
m e m b e rs or pe rsona l a c qua inta n c e s of M r. R oge rs--and a lle ge d tha t the y ha d
c onspire d to c om

m it “ grand the ft through c o nve rsion” of the a sse ts of M r. R oge rs’
m othe r. The form s furthe r a lle g e d tha t the ta rge t taxpa y e rs knowingly

e n ga ge d in
a “ pla nne d offe nse ,” through whic h prope rty owne d in pa

rt by M r. R oge rs’ m othe r
wa s fra u dule ntly shifte d through a

va rie ty of busine ss e ntitie s, with there sult tha t she wa s “ [dive ste d] of he r fina nc ia l a sse ts a

nd prope rty without he r dire c t knowle dge or c ontrol.” M r. R o ge rs a

tt a c he d a num be r of supporting docum e nts to his Form s 211, inc l uding va

rious trust instrum

e nts, a ffidav its, c o rporate filings, a nd ne w s a rtic le s. The doc um e nts we re pa

rt of a n “ inve stiga

tion re port” tha

t M r. R oge rs ha d pre pa

re d-6-

and subm itte d to la

we n forc e m e nt a ge nc ie s at the Fe de ra l, Sta

te , a nd loc a l le ve ls in
an atte m pt to re ga in owne rship of his mothe r’ s a sse ts. 2 B
. W B O R e v ie w M r. R o ge rs’ Form s 211 a nd atta c hm e nts (c olle c tive ly , his c la im ) we re
re c e ive d a

nd da te -sta m pe d by the W B O Initia l C l a im s Eva luation (“ IC E ” ) Te am in August 2019. The

IC E Te am

a ssigne d nine se pa

ra te c la im num

be rs--inc luding one
m a ste r c la im

num be r--to M r. R oge rs’ c l a im and m a ile d him

a le tte r a c knowle dging that the W B O ha d re c e ive d the m ate ria l s. The IC E Te am the n route d M r. R oge rs’
c la im to a c la ssifie r in the IR S Sm a ll B usine ss Se lf-Em p loy e d (“ SB SE” ) ope ra ting division. 3 The SB SE c la ssifie r re vie we d the c la i m and c om ple te d a c la ssific ation she e t for e a c h

of the nine se pa

ra te c la im num be rs. The c l a ssifie r m a d e the sa m e
re c o m m e ndation on e a c h

she e t: “ R e

je c t the C la im : Alle gations a re not spe c ific , c re d ible , or are spe c ulative --Alle gations a re not c re dible .” On the c la s sific ation

2 The pa c ka ge tha

t M r. R oge rs se n t to theW B O inc l ude d a powe r of attorne y a uthoriz i ng M r. R o ge rs to a c t on his m o the r’ s be h a lf. M r. R oge rs’ m o the r die d on July 10, 2020, a

nd he is now thee xe c utor of he r e sta te . 3 As the C ourt obse rve d in C line v. C om m issione r, T.C . M e m o. 2020-35, a t *5 n.3, the ope ra tion of thec la im e va luation func t ion of the W B O--whic h inc l ude s c la im inta

ke , m onitoring, a

nd a wards proc e ssing--is now sha re d by the SB SE ope ra ting division. Se e Inte rna l R e ve n ue M a n u a l (“ IRM ” ) pt. 1.1.26.1.3.5 (Jan. 11, 2018).-7-

she e t for the m a ste r c la im num b e r, the SB SE c la ssifie r liste d the following a s ba se s for his re c om

m e ndation: 4

• TP ha s file d

[F] orm 1040 through 2017, m

issing 2018.

• The re are no ba la

nc e s due
. [ 5 ]

• W B did not provide a bre akdown of the y e a

rs a nd how m uc h m one y wa s be ne fitte d to TP pe r y e ar.

• The * * * [whistle

blowe r’ s inform ation] sta te s tha t TP a n d a ssoc iate s e m

be z z le d a tota l of $8M sinc e 1992.

• W B doe s not provide doc um e ntation to show how m uc h m one y wa s e m be z z le d a nd whe n m one y

wa s e m be z z le d
.

• Fa ilure to providesubsta ntive inform ation, if a

v a ila ble , to support thea lle gation. R e je c ting c la im

pe r Tre a s. R e g. 301[.] 7623-1(c )(1) for fa iling to inc lude spe c i fic and c re dible inform ation to support a

pote ntia l tax viola

tion/a lle gation, a s we ll a s doc um e ntation to support the c la im
. The W B O E-Trak re port for e a c h c la im num be r a ssoc iate d with M r. R oge rs’ c la im indic a te s tha

t the SB SE c la s sifie r furthe r re c om m e nde d : “ T re at a s a

7623(a ) c la im for purpose s of the re

je c t ion[.] The a l le gations m ay de sc ribe an am ount gre ate r

4 The c la s sific a tion she e ts for the re m a ining c la im num b e rs we re ide ntic a l in a ll m a te ria l re s pe c ts to theshe e t for the m a ste r c l a im num be r, a pa rt from m inor va riations in the

tax historie s of the ta

rge t taxpa y e rs. 5 The se first two e ntrie s de m onstra t e tha t the SB SE c la ssifie r pe rform e d at le a st a c ursory

re vie w of e a c h ta

rge t taxpa y e r’ s tax filings.-8-

tha n $2 m illion, but the

c la im la c ks spe c ific /c re dible inform ation, is pure ly spe c ulative in na

ture , or doe s not a lle ge a

tax issue .” A fe wda y s a fte r the SB SE c la ssifie r c om p le te d his re vie w, a

Ta xExa m ining Te c hnic i an for the W B O dra fte d a n Awa rd R e c om m e ndation M e m orandum (the

“ ARM ” ). The ARM wa s a ddre sse d to Ke ith De ha rt, a supe rvisory

Ta x Exa m ining Te c hnic i an ove rse e ing the W B O ’ s IC E te am . The ARM inc lude d a nota tion
re c o m m e nding tha

t the W B O “ re

je c t” M r. R o ge rs’ c la im . The AR M furthe r
e xpla ine d tha

t the c l a im

ha d be e n “ [r] e c om

m e nde d for re

j e c tion by

c l a ssific ation.” In a ddition to this “ Sum

m ary R e c om m e ndation,” the ARM re c ite d the sa m e ba se s for the re c om

m e ndation tha

t a ppe are d in e a c h of the SB SE c la ssifie r’ s
c la ssific a tion she e ts. Afte r the A R

M ’ s pre pa

ra tion, theW B O did not forwa rd M r. R oge rs’ c la im to a n IR S e xam ine r for possiblea c tion with re spe c t to theta rge t taxpa y e rs. Inste a d, the IC E Te am

im m e diate ly issue d M r. R oge rs a le tte r (the “ W B O Le tte r” or “ L e tte r” ), da

te d Se pte m

be r 10, 2019, de c lining to gra nt him an a ward. The Le tte r, whic h

wa s sty le d “ Fina l De c ision Unde r Se c t ion 7623(a),” wa s signe d by

“ Layn e C arve r for Jose ph He bb, Progra m M ana ge r W histleblowe r Offic e , SPPA,”
and sta te d in re le va nt pa rt: The Whistleblowe r Offic e ha s c onside re d y our Form 211, Applic ation for Award for Origina l Inform ation, da te d 08/05/2019 * * * The-9-

Whistleb lowe r Offic e ha s m a de a fina l de c ision to re

je c t y o ur c l a im for an a ward. The c la im ha s be e n re

je c te d be c a

use the IR S de c ide d

not to pursue

the inform ation y ou provide d. [ 6 ] The W B O E-Trak re port for e a c h c la im num be r a ssoc iate d with M r. R oge rs’ c la im lists the date the Le tte r wa s issue d a s the date of “ C losure Ac tion.” Ac c ording to the E -Trak re ports, thea c tion ta ke n for e a c h c la im

num be r wa s “ C la im

R e je c te d: Alle gations a

re not spe c i fic , c re dible , or a re spe c ulative .” Ea c h re port liste d

“ C la ssific a tion” a s the re le va nt de c ision m ake r. C
. Ta x C ourt Proc e e dings M r. R o ge rs tim e ly

a ppe a le d to this C ourt se e king re vie w of the W B O’ s
award de te rm ination unde r se c tion 7623(b)(4). The pe tition rep e at e d the
a lle gations from

M r. R oge rs’ Form s 211 a nd a s se rte d

tha t the c a sh a

nd prope rty
c onve rte d by

the ta rge t taxpa y e rs we re not “ taxe d a

ppropria te ly ” at the Fe de ra l or the State le ve l. M r. R oge rs a lso re que ste d tha t the C om m issione r produc e c e rta i n
re c o rds to fa c ilita

t e M r. R oge rs’ inve stiga

tion of theta

rge t taxpa y e rs, inc luding
m ore tha n 50 y e ars of tax re turns a

nd “ Ta x a n d Ea rnings Sta

te m e nts” for his
m othe r.

6 The Le tte r a lso sta

te d: “ If y ou disa gre e with this de te rm ination, y ou ha ve 30 da y s from the date of this le tte r to file a pe tition with the

Ta x C ourt.”-10-

The C om m issione r file d

an a nswe r that

did not a ddre ss c e rta in m one ta ry thre sholds under I.R .C . se c tion 7623(b)(5) discusse d in gre ate r de ta il be low. The C om m issione r subse q

ue n t ly file d a m otion for sum

m ary judgm e nt unde r R

ule 121,
a long with a

supporting de c la

ra tion a nd atta c hm e n ts. 7 M r. R oge rs re sponde d in opposition. On Se

pte m be r 28, 2020, the

C ourt he ld a

he aring on the C om m issione r’ s m otion in which both pa rtie s a ppe are d a n d we re he ard. The C om m issione r file d a

supple m e nt to his mo tion a fte r the he a ring. Disc ussion I. Sum

m a ry Judgm e nt The purpose of sum

m ary judgm e nt is to e xpe dite litiga tion a nd a void
unne c e ssa

ry tria ls. Fla . Pe a c h C orp. v. C o m m issione r, 90 T.C . 678, 681 (1988). Ge ne ra lly spe aking, theC ourt m ay

grant sum

m ary judgm e nt whe n the re is no ge nuine d ispute a s to a

ny m a te ria l fa c t a

nd a de c ision m ay be re nde re d a s a m atte r of la w. R ule 121(b); Sundstra

nd C orp. v. C om

m issione r, 98 T.C . 518, 520 (1992),
a ff’ d, 17 F.3d 965 (7th C ir. 1994). The usua l sum

m ary judgm e nt sta

nda rd is le ss a

pt in a c a se like this one , whe re we m

u st c onfine ourse lve s to the a dm inistra tive re c ord to de c ide whe the r

7 The de c la

ra t ion a nd supporting e xhibits we re lodge d with theC ourt, a nd the C om m issione r sim

ulta ne ously file d a m o tion for le a

v e to file unde r se a l the de c la ra tion a nd e xhibits to de c la

ra tion of Ke i th De h art in support of re sponde nt’ s m otion for sum

m a ry judgm e nt. The C ourt gra nte d the m otion to file

unde r se a l.-11-

the re ha s be e n

an a buse of disc re tion. Se e Van B e m m e le n v. C o m

m issione r, 155 T.C . 64, 78 (2020). In such a c a se , ge n e ra lly

the re will be no tria l on the
m e rits. The re fore , whe n we re vie w fina l a ge nc y a c tion unde r the Adm inistra tive Proc e d ure Ac t, 5 U.S.C . se c s. 551-559, 701-706 (2018), sum m a ry judgm e nt se rve s
a s a m e c ha

nism for de c iding, a s a

m atte r of la

w , whe the r the a ge nc y a c tion is supporte d by the a dm inistra tive re c ord a

nd is not a

rbitra ry , c a pric ious, a

n a buse of disc re tion, or otherwise n o t in a c c o rdanc e with la w. Va n B e m m e le n v. C om m issione r, 155 T.C . at 79. II. Whistleb lowe r Fra m e work A. Se c tion 7623(a

) and (b) As we have sa id, se c tion 7623 provide s for a wards to whistle

blowe rs who subm it inform a tion a

b o ut third pa

rtie s who ha

ve unde rpa id the ir tax e s or othe rwise viola te d the inte rna l re ve nue la ws. Se c tion 7623(a

) a uthoriz e s disc re t iona

ry pa ym e nts in c e rta in c i rc um s ta nc e s, while se c tion 7623(b) provide s for nondisc re tiona

ry (i.e
. , m a n dat ory ) awards. B e fore an a ward m a y be pa id, the IR S ge ne ra lly m ust proc e e d with a

n “ a d m inistra tive or judic ia l a c tion” and c olle c t proc e e ds from

the ta rge t taxpa y e r. Se e se c . 7623(b)(1); C ohe n v. C om m issione r, 139 T.C . 299, 302 (2012), a ff’ d, 550 F. App’ x10 (D.C . C ir. 2014); se e a lso
se c . 7623(a ).-12-

Unde r se c tion 7623(b), the W B O first de te rm i ne s whe t he r a whistleblowe r is
e ntitle d to a

m andatory

award. If an a

ward is due , the n the W B O a lso de te rm ine s the a m ount of theaward. Se e se c . 7623(b)(1), (2), a nd (3). This C ourt ha s jurisdic tion to re v ie w the W B O’ s de te rm i nations unde r se c tion 7623(b), inc luding de te rm i nations tha

t no a ward is due . Se e se c . 7623(b)(4); La c e y v. C o m m issione r, 153 T.C . 146, 169 (2019); se e a lso C oope r v. C om m issione r, 135 T.C . 70, 75-76 (2010). W e do not, howe ve r, have a uthority to orde r the IR S to c o m

m e nc e an
a dm inistra

tive or judic i a l a c tion or to re vie w its de te rm ination of thea lle ge d tax lia bility to whic h a

whistleblowe r’ s c la im

pe rta i ns. Se e La c e y v. C om m issione r, 153 T.C . at 166; se e a lso C ohe n v. C om m issione r, 139 T.C . at 302 (c iting C oope r v. C om m issione r, 136 T.C . 597, 600 (2011)). In a ddition, this C ourt ge ne ra lly doe s not re vie w a

ward de te rm inations tha

t have be e n prope rly m a de unde r se c tion 7623(a ) a s oppose d to se c tion 7623(b). Se c tion 7623(a

) a pplie s if c e rta in m one ta

ry thre sholds under se c tion 7623(b) a re not m e t. 8 Those thre sholds provide tha t se c tion 7623(b), ra

the r tha n
se c t ion 7623(a), a

p p lie s with re spe c t to a

ny a c tion if theproc e e ds in dispute e xc e e d

8 W e note tha

t the W B O ha s a

pra c tic e of la

b e ling a ll c la im s tha

t it be lie ve s are p ure ly spe c ulat ive or do not identify a spe c i fic or c re d ible tax issue a s se c t ion 7623(a) c la im s, se e IRM pt. 25.2.2.7.1(2) (Ja n. 12, 2018), but those la

be ls do not pre c lude our re vie w, se e , e .g., Va n B e m m e le n v. C o m

m issione r, 155 T.C
. 64, 71-72 & n.6 (2020).-13-

$2 m illion, se c . 7623(b)(5)(B ), and, for a n a c t ion a ga inst a

n individual, if the individual’ s gross inc om e e xc e e ds $200,000 for a ny taxa ble y e ar subje c t to the
a c tion, se c . 7623(b)(5)(A); se e Sm ith v. C om m issione r, 148 T.C . 449, 461 (2017) (e xpla ining tha

t the $200,000 thre shold a pplie s to individua

ls a nd the $2 m illion thre shold a

pplie s to a ll ta

xpa y e rs). W e have he ld, howe ve r, tha t the $2 m illion thre shold se t out in se c tion 7623(b)(5)(B ) is not jurisdic tiona l . Lippolis v. C om m issione r, 143 T.C . 393, 397-398 (2014). R athe r, tha t thre shold c onstitute s
an a ffirm a tive de fe nse tha t the C om m issione r m

ust ra ise in his a

nswe r and with
re spe c t to whic h the C o m m issione r be a

rs the burde n of proof. Se e id. a t 400. Our
re a s oning a

nd c onc lusions in Lippolis a pply with e q ua l forc e to the $200,000 thre shold, a

nd we now hold tha

t se c tion 7623(b)(5)(A) likew ise is not jurisdic tiona l . Ac c ordingly , if the C om m issione r wishe s to a

rgue tha t we are pre c lude d from

re vie wing a

de te rm ination ba se d on e ithe r of the m one ta ry thre sholds under se c tion 7623(b)(5), he m ust so a lle g e in his a

nswe r and m

ust
satisfy his burde n

of proof. B
. R e je c tions a nd De nia ls The sta tutory provisions gove

rning whistle

blowe r awards a

re suc c inc t, a

nd the D e pa rtm e nt of the Tre a s ury

and the IR S have a d opte d re gula tions supple m e nting thesta

tutory sc he m e . As re le va nt to our de c ision, there gula tions-14-

provide for two distinc t ty pe s of de te rm inat ions tha t re sult in no a

ward: re je c tions
and de nia ls. W e de s c ribe e a c h ty pe of de te rm ination in gre ate r de ta il be l ow. 1. R e je c tion The re gula

tions e sta blish c e rta in m inim

um c rite ria that a

p ply to a ll whistleblowe r c la i m s . In pa rtic ula r, se c tion 301.7623-1(b), Proc e d. & Adm in. R e gs., de sc ribe s whic h individuals a re e l igible to file a

c la im (i.e ., it a ddre sse s the

“ Who m ay

file ? ” que stion), while

se c tion 301.7623-1(c ), Proc e d . & Adm in. R e gs., de sc ribe s the inform a tion e a c h c la im should inc lude (i.e ., it a ddre sse s the “ What inform a t ion m

u st be subm itte d? ” que stion). Am ong othe r things, a c la im ge ne ra lly
m ust (1) inc l ude spe c ific , c re dible , a nd nonspe c ulative inform ation tha t the whistleblowe r be lie ve s will le a d to c olle c te d proc e e ds, (2) re port a fa ilure to
c om ply with theinte rna l re ve nue la ws a nd ide ntify

the pe rson(s) be lie ve d to ha ve fa ile d to c om

ply with theinte rna l re ve nue la ws, a nd (3) provide substa

ntive inform a t ion in support of the whistleblowe r’ s a lle gations, inc luding a ll a va ila ble doc um e ntation. Se e s e c . 301.7623-1(c )(1), (4), Proc e d. & Adm in. R e gs.; se e a lso La c e y v. C o m m i ssione r, 153 T.C . at 160. For the se purpose s, a c la im is c onside re d pure ly spe c ulative if it la c ks a

ny ba sis or support for its a

lle gations. Se e La c e y

v. C om m issione r, 153 T.C . at 161.-15-

Unde r the re gula

tions, “ [a ] re

je c tion is a

de te rm ination tha

t re late s sole ly

to the w histleblowe r and the inform ation on the fa c e of the c la im

tha t pe rta ins to the whistleblowe r.” Se c . 301.7623-3(c )(7), Proc e d. & Adm in. R e g s.; se e a lso Inte rna l R e ve nue M anua l (“ IRM ” ) pt. 25.2.1.1.3(7) (Apr. 29, 2019) (“ A re j e c tion is a de te rm i nation tha

t re late s to the whistleblowe r’ s e ligibility to file a c la im for
award, or the subm ission of information a n d c la im s for a

ward (i.e ., the c la im

did not c onta in a

tax issue , the inform ation on the Form 211 wa s not spe c ific /c re dible inform a t ion, the c la i m

wa s pure ly

spe c ulative in na

ture , or the Se rvic e wa s una ble to ide ntify

the taxpa y e r ba se d on the inform ation provide d by the whistleblowe r).” ). 9 Ac c ordingly , a nd a s provide d in the re gula tions, a re je c tion is
a ppropria te whe n a whistleblowe r’ s c la im

fa ils to c om

ply with thethre shold
re quire m e nts a s to who m a y subm it a c l a im or what inform ation thec la im m ust inc l ude . Se e se c . 301.7623-1(b), (c )(4), Proc e d. & Adm in. R e gs.; se e a lso
se c . 301.7623-3(b)(3), Proc e d. & Adm in. R e gs.

9 The de finition of “

re je c tion” in the c urre nt IR M is ide ntic a l to the2019 ve rsion. Se e IRM pt. 25.2.1.1.3(7) (M ay 28, 2020). W e note tha

t the provisions of the IR M c an be instruc tive in unde rsta nding theIR S’ inte rpre tat ion of a sta tute , se e Ginsburg v. C om

m issione r, 127 T.C . 75, 87 (2006), a nd in a sc e rta ining the proc e d ure s the IR S e xpe c ts its e m ploy e e s to follow, se e W a d le igh v. C om m issione r, 134 T.C . 280, 294 (2010). The IRM , howe ve r, doe s not ha ve the forc e of la

w. Se e M arks v. C om

m issione r, 947 F.2d 983, 986 n.1 (D.C . C ir. 1991), a ff’ g T.C . M e m o . 1989-575; Va llone v. C o m m issione r, 88 T.C . 794, 807 (1987).-16-

C ongre ss ha s e ntruste d to the W B O the initia l e va luat ion of whistle blowe r
c la im s to de te rm ine whe the r the y satisfy the m inim

um sta nda rds for a n a w ard. 1 0 Se e Ta x R e lie f and He a lth C are Ac t of 2006, Pub. L. No. 109-432,
se c . 406(b)(1)(B ), 120 Sta t . at 2960 (providing tha

t the W B O “ sha ll a

na ly z e inform a t ion re c e ive d

from any individual * * * a

nd e ithe r inve stiga

te the m atte r itse lf or a ssign it to the

a ppropria te Inte rna l R e ve nue Se rvic e offic e ” ); se e a lso
se c . 301.7623-1(c )(4), Proc e d. & Adm in. R e gs. Ac c ordingly , the W B O de te rm ine s whe the r a c la im should bere

j e c te d on its fa c e or whe the r furthe r c onside ra t ion is
warran te d. If a c la im fa ils to m e e t the thre shold c rite ria , de pe n ding on the
c irc um s ta nc e s , the W B O m a

y c hoose to notify

the whistleblowe r of any de fic ie nc ie s a

nd give him

an opportunity

to pe rfe c t

the c la i m be fore the W B O take s furthe r a c tion. 1 1 Se e se c . 301.7623-1(c )(4), Proc e d. & Adm in. R e gs. Onc e the W B O de t e rm ine s tha

t it will re je c t a c la im , what ha

ppe n s ne xt turns on whe the r the c la i m is subje c t to se c t ion 7623(a) or se c t ion 7623(b). If the c la im is subje c t to

1 0 As note d

a b ove , se e supra

note 3, the c la i m

e v a luation func t ion of the W B O is now sha

re d by the SB SE ope ra t ing division.
1 1 This opportunity

is a va i la ble only if the de fic ie nc y

re l ate s to the c onte nts of the c la im

(i.e ., the “ what” que stion unde r se c t ion 301.7623-1(c )(1), (2), or (3), Proc e d . & Adm in. R e gs.), a s oppose d to the e ligibility of the whistleblowe r (i.e ., the “ who” que stion unde r se c tion 301.7623-1(b), Proc e d. & Adm in. R e g s.). Se e se c . 301.7623-1(c )(4), Proc e d. & Adm in. R e gs.-17-

se c t ion 7623(a), the W B O provide s writte n notic e to the whistleblowe r stat ing the ba sis for the re

je c t ion without se

nding a pre lim i na

ry re je c tion le tte r. Se c . 301.7623-3(b)(3), Proc e d
. & Adm in. R e gs. If the W B O inste a d de te rm ine s that it will re je c t a c la im

unde r se c tion 7623(b), it c om m e nc e s a “ whistleblowe r
a dm inistra

tive proc e e ding” by

se nding thewhistleblowe r a pre lim ina

ry re je c tion le tte r that sta te s the ba s is for the re

je c t ion a nd invite s the whistleb lowe r to subm it
c om m e n ts. Se c . 301.7623-3(c )(7), Proc e d . & Adm in. R e gs. The W B O re vie ws a l l
c om m e n ts tim e ly

subm itte d by

the whistleb lowe r and, if it still be lie ve s tha t a
re je c tion is a

ppropria t e , provide s writte n notic e of the re je c tion to the whistleblowe r, a g a in with a n e xpla nation. Id. W

he n a c la im (whe t he r unde r
se c t ion 7623(a) or se c tion 7623(b)) is re je c te d for fa ilure to m e e t thre shold c rite ria othe r tha n those re lating to the

e ligibility

of the whistleblowe r unde r se c tion 301.7623-1(b), Proc e d . & Adm in. R e gs., the re gula tions provide

tha t the whistleblowe r ha s a

post-re je c tion opportunity to “pe rfe c t a nd re subm it the c la im .” Se e se c . 301.7623-1(c )(4), Proc e d. & Adm in. R e gs.; se e a lso La c e y v. C om m issione r, 153 T.C . at 161-162.-18- 2. De nia l A “ de nia l” is funda

m e nta lly diffe re nt from a

“ re j e c tion.” Unde r the
re gula tions, “ [a ] de nia l is a

de te rm ination tha

t re l ate s to or im

plic ate s taxpa

y e r inform a t ion.” Se c . 301.7623-3(c )(8), Proc e d. & Adm in. R e gs.; se e a lso IR M pt. 25.2.1.1.3(3) (“

A de nia l is a

de te rm ination tha

t is m a de for re a sons be y ond the inform a t ion c onta ine d on the Form 211. [sic ] (e
. g., the Se rvic e did not proc e e d ba se d on the inform a tion provide d by the whistleblowe r, the c a se wa s surve y e d or
no c ha nge d by the ope ra ting division, the issue (s) a lle ge d by

the whistleblowe r
we re no c ha

n ge issue s, the issue s a lle g e d by the whistleblowe r we re be l ow thre shold, thesta

tute ha s e xpire d on the issue s ra ise d by the whistleblowe r, the re
are n o c o lle c te d proc e e ds).” ). 1 2 The W B O ’ s de nia l of a c la im indic ate s tha

t “ the IR S e ithe r did not proc e e d ba se d on the inform ation provide d by the whistleblowe r * * * or did not c olle c t proc e e ds” a s a re s ult of proc e e ding a ga inst thetaxpa y e r on the b a sis of thewhistleblowe r’ s inform ation. Se c . 301.7623-3(c )(8), Proc e d. & Adm in. R e gs.; se e a lso se c . 301.7623-3(b)(3), Proc e d. & Adm in. R e gs.; T.D. 9687, 2014-36 I.R .B . 486, 500 (“ [A] de nia l ofte n re late s to or im plic ate s taxpa

y e r inform a t ion (for e xam

ple , be c a use the IR S did not proc e e d ba se d on the inform a t ion provide d or did not c olle c t a ny proc e e ds).” ). Ac c ordingly , a de nia l is a

1 2 The de finition of “ de nia l” in the c urre nt IR M is m ate ria l ly

ide ntic a l to the 2019 ve rsion. Se e IRM pt. 25.2.1.1.3(3) (M ay 28, 2020).-19-

de te rm i nation tha

t is m a de a fte r the W B O e n ga ge s in som e substa ntive
c onside ra tion be y ond the fa c e of a c la im . Se e La c e y

v. C om m issione r, 153 T.C
. a t 161-162, 168. The W B O ha

ndle s a de nia l of a

c la im sim ila rly to a re je c tion. In the c a se of
a de n ia l unde r se c tion 7623(a ), the W B O provide s writte n notic e of the de nia l to the w histleblowe r, but doe s not sta te the ba sis for the de n ia l. 1 3 Se e se c . 301.7623- 3(b)(3), Proc e d . & Adm in. R e gs. In the c a se of a de nia l unde r se c tion 7623(b), the W B O se n ds the whistleblowe r a pre lim ina

ry de nia l le tte r that

sta te s the ba sis for the d e nia l and invite s the whistleblowe r to subm i t c om m e nts, whic h sta

rts the whistleblowe r a dm inistra tive proc e e ding to whic h the whistleb lowe r is e ntitle d (sim ila r to tha t a fforde d in the c a se of a re je c tion unde r se c tion 7623(b)).

1 3 This provision of notic e doe s not sta rt a whistleblowe r a dm i nistra tive proc e e ding. Thepre am

ble to the fina l re gula

tions e xpla ins tha

t Tre a sury and the IR S c onside re d whe the r to m ake de nia ls of c la im s unde r se c tion 7623(a

) subje c t to a

n a d m inistra t ive proc e e ding simila

r to the de nia l of c la im s unde r se c tion 7623(b). Howeve r, give n the nature of c la im s unde r se c tion 7623(a ) an d the la

rge num be r of suc h c la im s, Tre a sury

and the IR S de te rm ine d tha t the a dm inistra

t ive burde n of providing a

n a dm inistra

tive proc e e d ing would signific antly outwe igh the sm a ll a

m ount of a dditiona l inform at ion tha t would be provide d in the de nia l le tte rs. W e note , howe ve r, tha t the sa m e se c tion 6103 c onc e rns a

re not pre se nt with re

j e c tion le tte rs. Ac c ordingly , in the c a s e of a re je c tion unde r se c tion 7623(a ) or (b), the writte n notic e is not subje c t to thesa m e lim ita tions unde r se c tion 6103 a nd will e xpla in the ba sis for the re je c tion. * * * [T.D. 9687, 2014-36 I.R .B . 486, 500.]-20-

Se c . 301.7623-3(c )(8), Proc e d
. & Adm in. R e gs. The W B O c onside rs a ny tim e ly
re sponse from the whistleblowe r and, if it still be lie ve s a de nia l is a

p propria te , provide s writte n notic e to the whistleblowe r so sta t ing, inc luding theba sis for its de te rm i nation. B e c a

use a de nia l is ba se d

on fa c tors be y ond de fic ie nc ie s on the fa c e of the whistleblowe r’ s c la i m , the re gula tions do not provide

the whistleblowe r
an opportunity to pe rfe c t his c la im a fte r a de n ia l. C om

p are id. pa

ra s. (b)(3), (c )(8), with se c . 301.7623-1(c )(4), Proc e d. & Adm in. R e gs. III. Standa

rd a nd Sc o pe of R e vie w Se c tion 7623(b)(4) provide s tha t “ [a ] ny de te rm i nation re ga

rding a n a w ard” unde r se c tion 7623(b) may be “ a ppe a le d to the Ta x C ourt (a n d the Ta xC o urt sha ll have jurisdic tion with re s pe c t to suc h m atte r).” W e re v ie w the W B O ’ s de te rm i nations re ga

rding a n a ward for a

buse of disc re tion. Se e Ka spe r v. C om m issione r, 150 T.C . at 22-23. Abuse of disc re tion e xists whe n a de te rm ination is a rbitra ry , c a p ric ious, or without sound ba sis in fa c t or la w. Se e M urphy

v. C om m issione r, 125 T.C . 301, 320 (2005), a ff’ d , 469 F.3d 27 (1st C ir. 2006). An
a ge nc y ’ s fa ilure to follow its own re gula tions ty pic a lly is a n a b use of disc re tion. Se e Fort Ste wart Sc h. v. FLR A, 495 U.S. 641, 654 (1990) (“It is a fam ilia r rule of
a dm inistra

tive la w tha t a n a g e nc y m ust a bide by its own re gula

tions.” (c iting Vita re lli v. Se a ton, 359 U.S. 535, 547 (1959) (Fra nkfurte r, J., c onc urring in pa rt,-21-

disse nting in pa

rt), a nd Se rvic e v. Dulle s , 354 U.S. 363, 388 (1957))); R e ute rs Ltd. v. FC C , 781 F.2d 946, 947 (D.C . C ir. 1986) (“ A pre c e pt whic h lie s at the founda tion of them ode rn a dm i nistra tive sta te is tha t a ge nc ie s m

ust a bide by the ir rule s a nd re gula t ions.” ); B la

nton v. Offic e of the C om ptrolle r of the C urre nc y , 909 F.3d 1162, 1176 (D.C . C ir. 2018) (c iting R e ute rs); se e a lso Pa tton v. C om m issione r, 116 T.C . 206, 210 (2001) (“ [The C om m i ssione r] is re quire d to follow thesta

tute and a bide by re gula tions re a sona

bly ba se d on the sta

tute , a nd fa ilure to do so will a

m ount to a

n a buse of disc re tion.” (c i ting La nsons, Inc . v. C om m issione r, 622 F.2d 774, 776 (5th C ir. 1980), a ff’ g 69 T.C . 773 (1978), a nd B uz z e tta C o nstr. C orp. v. C om

m issione r, 92 T.C . 641, 647 (1989))). In a sc e rta i ning whe the r the W B O a buse d its disc re tion, we ge ne ra lly c onfine
our re vie w to the a dm i nistra tive re c ord. Se e Ka spe r v. C om m issione r, 150 T.C
. a t 20. In thewhistleblowe r c onte xt, the a dm inistra tive re c ord c onsists of “ a ll inform a t ion c onta ine d in the a dm inistra t ive c la im file tha t is re le va nt to theaward de te rm i nation a

nd not prote c t e d by

* * * privile ge s.” Se c . 301.7623-3(e )(1), Proc e d . & Adm in. R e gs. The Supre m e C ourt ha s he ld tha t “ a re vie wing c o urt, in de a ling with a de te rm i nation or judgme nt whic h a n a dm inistra

tive a ge nc y

a lone is a uthoriz e d to
m ake , m ust judgethe proprie t

y of suc h a c t ion sole ly

by the grounds invoke d by the-22-

a ge nc y . ” C he ne ry

II, 332 U.S. a

t 196 (sum

m ariz ing the holding of C he ne ry I, 318 U.S. 80). C onse que ntly , we he ld in Ka spe r v. C om m issione r, 150 T.C . at 23-24: Unde r the C he ne ry

doc trine we c an uphold the W B O’ s de te rm i nation only on the grounds it a c tua lly re lie d on whe n

m aking its de te rm ination. * * * This m e ans tha t the W B O m

ust c le arly

se t forth the grounds on whic h it m a de its de te rm ination, so tha t we don’ t ha

v e to gue ss. Se e * * * [C he ne ry II, 332 U.S. a

t 196] . W e c annot uphold the W B O’ s de te rm ination “ sim ply be c a use findings might ha

ve be e n m a de and c onside ra tions might be disc lose d whic h m i ght justify

his ultim a te c onc lusion.”Antioc o[ v. C o m m issione r, T.C . M e m o. 2013- 35] , at *25 (c iting C he n e ry I, 318 U.S. a

t 93-94). Thus, our C ourt re vie ws a W B O de te rm ination by

re fe re nc e to the grounds that it sta te s, not by re fe re nc e to post hocra tiona liz ations. La c e y v. C om m issione r, 153 T.C . at 165. In pe rform ing this a na l y sis, we m ay

c onside r a

ny

“ c o nte m pora ne ous e xpla

nation of thea ge n c y

de c ision” c onta i ne d in the re c ord. Tourus R e c ords, Inc . v. DEA, 259 F.3d 731, 738-740 (D.C . C ir. 2001) (quoting C am p v. Pitts, 411 U.S. 138, 143 (1973)) (de c iding not to rem and a c a s e involving
a le tte r with a

n insuffic ie nt e xpla

nation of a

n a ge nc y ’ s a c tion be c a

u se the re c ord
c onta ine d c onte m

pora ne ous e xpla

nat ions of thea ge nc y ’ s de c ision-m aking
ra tiona le ). W e will “u

phold a de c ision of le ss tha

n ide a l c la

rity if the a ge nc y ’ s pa

th
m ay re a s ona bly be disc e rne d .” B owm an Tra nsp., Inc
. v. Ark.-B e st Fre ight Sy s., Inc
. , 419 U.S. 281, 286 (1974).-23-

If the C ourt de c ide s tha

t the W B O a

buse d its disc re tion in re

je c ting or de ny ing a whistleblowe r’ s c la im , the n we c an re m and the c a se for furthe r
c onside ra tion. Se e La c e y v. C o m m issione r, 153 T.C
. at

165, 172-173; Whistleblowe r 769-16W

v. C om m i ssione r, 152 T.C . 172, 181-182 (2019) (holding that the Ta x C ourt m ay

in a ppropria te c irc um sta

nc e s re m and a

whistleblowe r c a se to the W B O for furthe r c onside ra tion); se e a lso Fla . Powe r & Light C o. v. Lorion, 470 U.S. 729, 744 (1985) (“ If the re c ord be fore the a ge nc y doe s not support the
a ge nc y a c tion, if thea ge nc y ha s not c onside re d a ll re le va nt fa c tors, or if the
re vie wing c ourt sim

ply c annot e va luate the c ha l le nge d a ge nc y a c tion on the

ba sis of the re c ord be fore it, the prope r c ourse , e xc e pt in ra re c irc um sta

nc e s, is to
re m and to thea g e nc y for a dditiona l inve stiga t ion or e xpla

nation.” ). IV. Apply ing the Sta

nda rds to theC om

m issione r’ s M otion A. Se c tion 7623(b)(5) As we have disc usse d, se c tion 7623(b) a uthoriz e s our re vie w of W B O de te rm i nations whe n

two m one ta

ry thre sholds se t out in se c t ion 7623(b)(5) a re
satisfie d. W e the re fore be gin with a proc e d ura l que stion: Are we pre c lude d from
re vie wing M r. R oge rs’ pe t ition be c a use the re c ord doe s not e sta b lish tha t the a c tion he re satisfie s the m one ta

ry thre sholds? W e c onc lude tha t the answe r is no.-24-

As we he ld in Pa

rt II.A, ne i the r of the m one ta ry thre sholds se t out in
se c t ion 7623(b)(5) is jurisdic tiona l. The re fore , if the C om m issione r wishe s to
argue that one or both of thethre sholds pre c lude s our re vie w, he m ust so a lle ge in his a nswe r and sa

tisfy his burde n of proof. The C o m m issione r ha s not doneso he re , a nd we the re fore proc e e d to c onside r the m e rits. B
. Abuse of Disc re t ion 1. The W B O Le tte r Unde r C he ne ry

I, 318 U.S. a

t 89, we judge a ge nc y

a c tion “ by the sta nda rds whic h the * * * [a g e nc y ] itse lf invoke d.” Se e a lso C he ne ry II, 332 U.S. a

t 196. Ac c ordingly , in re vie wing the W B O’ s a c tion in this c a se , we turn first to its de te rm i nation: the

Le tte r m a i le d to M r. R oge rs. The W B O Le tte r wa s title d “ Fina l De c ision Unde r Se c tion 7623(a )” and sta te d in re l e va

nt pa rt: The Whistleblowe r Offic e ha s m a d e a fina l de c ision to re

je c t y our c la im for an a ward. The c la im ha s be e n re

je c te d be c a

use the IR S de c ide d

not to pursue

the inform ation y ou provide d. [Em pha s is a dde d.] On its fa c e , the Le tte r state s tha t the W B O is re

je c ting M r. R oge rs’ c la im
. B ut the W B O Le tte r fa ils to inc lude any ra tiona le tha

t would support a

re je c tion unde r the re gula

tions. Se e se c . 301.7623-1(b)(2), (c )(4), Proc e d. & Adm i n. R e gs. (stating tha

t a whistleblowe r c la im

m ay be re je c te d for viola

t ing spe c ifie d-25-

m inim um c rite ria ); se e a lso IR

M pt. 25.2.1.1.3(7) (sta

ting tha t a re j e c tion is
a ppropria te if a c la im doe s not ra ise a

tax issue or is pure ly

spe c ulative , the inform a t ion on theForm

211 is not spe c ific or c re dible , or the IR S is una ble to ide n tify the taxpa y e r ba se d on the c la im ). The Le tte r ide n tifie s no de fic ie n c ie s with re spe c t to the“ who” or “ what” que stions a ddre sse d in the re gula tions. Se e
se c . 301.7623-1(b)(2), (c ), Proc e d. & Adm in. R e gs. Put a nothe r way , the W B O Le tte r doe s not sa

y tha t M r. R oge rs is a

n im pe rm i ssible whistleblowe r. Se e id. pa ra . (b)(2) (se tting out the “ who” re quire m e nts). Nor doe s the Le tte r sa y tha t the
m a te ria l s he subm itte d fe ll short of providing the inform ation there g ulations
re quire d. Se e i d. pa

ra . (c ) (se tting out the

“ what” re quire m e nts). The W B O Le tte r doe s not a ddre ss a

ny shortc om i ngs on M r. R oge rs’ pa rt, whic h is the foc us of a
re je c tion inquiry

unde r the re gula

tions. Se c . 301.7623-3(c )(7), Proc e d. & Adm in. R e gs. (“ A re

je c t ion is a

de te rm ination tha

t re late s sole ly

to the whistleblowe r and the i nform a tion on the

fa c e of the c la im

tha t pe rta ins to thewhistleb lowe r.” ); se e
a lso IR M pt. 25.2.1.1.3(7) (“

A re je c tion is a

de te rm ination tha

t re late s to the whistleblowe r’ s e l igibility to file a c la im for award, or the subm ission of inform a t ion a

nd c la im s for a

ward[.] ” ). R a the r tha

n foc using on the

whistleb lowe r and e xpla i ning wha t he fa ile d to do, a s re quire d by

the re je c t ion rule s unde r the re gula t ions, theW B O Le tte r-26-

switc he s its foc us to thea ge nc y itse lf a nd wha t the a ge nc y

c hose to do. Thus, the Le tte r te lls M r. R oge rs tha t “ the IR S de c ide d not to pursue the inform ation y ou provide d.” Wh ile this m ay be a pla usible e xpla

nation for a

de nia l, it doe s not
e xpla in the ba sis of a re

je c tion. 1 4 A de c i sion “ n ot to pursue ” (i.e ., “ not to proc e e d” ) is a qua si te rm

of a rt. Se e se c . 301.7623-3(c )(8), Proc e d. & Adm in. R e gs. (providing for “ d e nia l” whe re “ the IR S * * * did not proc e e d ba se d on the inform a t ion provide d by

the whistleblowe r” ); se e a l so se c . 301.7623-2(b)(1), Proc e d . & Adm in. R e gs. (noting tha t the IR S “ p roc e e ds ba se d on inform ation” whe n it “ c ontinue s to pursue an ongoing a c tion” tha t it would not othe

rwise have

“ c o ntinue d to pursue ” (e m pha sis a dde d)); se c . 301.7623-3(b)(3), Proc e d. & Adm in. R e gs. (de sc ribing a de n ia l for purpose s of se c tion 7623(a )). It doe s not support re je c t ions. In short, there g u latory

fra m e work ga

ve the W B O two distinc t pa ths for
a c tion--re je c t ion or de nia l. Ha

ving c om e to tha

t “ fork in the roa d,” the W B O Le tte r followe d

Yogi B e rra ’ s a dvic e and “ t ook it.” The Ya nke e gre at ’ s sugge stion
wa s sound in c onte x t, a s both prongs of the fork le d to his home . B ut with re spe c t to a whistleblowe r award, the two prongs of the re gula t ions le a d to ve ry

diffe re nt

1 4 Whe n a c la i m is re je c te d, it is inevita

ble tha t the IR S doe s not “

pursue the [whistleb lowe r’ s] inform a tion” (a s the W B O’ s Le tte r state s) nor pursue a ta rge t on the b a sis of tha

t inform a tion, but to sa

y so doe s not providea

re a son supporting a re je c tion.-27-

pla c e s. B y inc luding the“ de c ide d not to pursue ” ra tiona le a s the re a s on for its purporte d re

je c tion, theW B O Le tte r in e ffe c t sa id to M r. R oge rs “ we re je c t y our
c la im be c a use we are de ny ing the c la im .” This sta te m e nt wa s se lf-c ontra dic tory -- and the re fore im

pe rm issible --unde r the re gula tions. W e a ssum e that W B O pe rsonne l a re fam ilia r with the re

je c t ion a nd de nia l
c a te gorie s se t out in the

re gula t ions a nd thus a re puz z le d

by the Le tte r’ s a

ppa re nt disre ga rd of the m . 1 5 B ut, in a

ny e ve nt, we will not a

tte m pt “ to c h ise l tha

t whic h
m ust be pre c ise from

what the a ge nc y

ha s le ft va g u e and inde c isive .” C h e ne ry II, 332 U.S. a

t 197. The C om

m i ssione r ha s m ove d for sum m ary judgm e n t; he ha s the burde n of showing tha

t the W B O’ s de te rm ination is supporte d by the
a dm inistra

tive re c ord a

n d is not a

rbitra ry , c a pric ious, a

n a buse of disc re tion, or othe rwise not in a c c orda

nc e with la

w. Se e Van

B e m m e le n v. C om

m issione r, 155 T.C . at 78-79. B a se d on the c onte nts of theW B O ’ s Le tte r a lone , we are

1 5 Appa re ntly we are not a lone in be ing puz z le d by som e of the W B O’ s c om m unic a tions, a s tha

t Offic e re c e ntly a c knowle dge d. Se e W B O M e m . No. W O-25-0621-0001 (June 1, 2021) (re c ounting “ c o nfusion whe re whistleblowe rs have subm itte d le tte rs, inquirie s, a nd c om p la ints” be c a

use of the re

je c t ion of c la im s a nd de sc ribing re v i sions to inte rna l W B O guida

nc e to instruc t c la ssifie rs and subje c t m a tte r e xpe rts who re vie w whistleblowe r c la i m s “ not [to] use the te rm s ‘ re je c t’ or ‘ re

j e c tion’ whe n

providing fe e dba c k for the ir de c ision to de c line to forward the whistleb l owe r c la im to the ope ra ting division’ s a udit/inve stiga

t ion func tion for a c tion,” a lthough the “ [f] e e d ba c k m ust [c o ntinue to] sta

t e the ba sis or ra tiona le for not ta

king a c tion on the

c la i m ” ).-28-

una ble to gra nt the C om

m issione r’ s m otion. Se e R e ute rs, 781 F.2d a t 950-951; Pa tton v. C om

m issione r, 116 T.C . at 210. 2. The Adm inistra

tive R e c ord This c onc l usion doe s not e nd our inquiry . C onsiste nt with C he ne ry I, a de te rm i nation le tte r that is sile nt or m uddle d with re spe c t to a

supporta ble ra tiona le
m ay still besusta ine d if othe r m a te ria ls in there c ord c la rify the a ge nc y ’ s
re a s oning. Se e Tourus R e c ords, 259 F.3d a t 738-740 (a ge nc y

de c ision wa s
a de quate ly

supporte d be c a

use the re c ord inc lude d c onte m pora ne ous e xpla

nations of the a ge nc y ’ s de c i sion-m aking ra tiona le ); Ka spe r v. C om

m issione r, 150 T.C
. a t 24-25 (e v ide nc e from

an ope ra ting division c la ssifie r a de quate l y e xpla ine d
c la im ’ s re je c tion). 1 6 Suc h m a te ria ls c a nnot sugge st “post hoc ra tiona liz ations for
a ge nc y a c tion,” but a

re a c c e pta ble if the y

offe r “ c onte m

p orane ous e xpla

nation[s] of the a ge nc y

de c ision.” Ka spe r v. C om m issione r, 150 T.C . at 24-25 (quoting Tourus R e c ords, 259 F.3d a t 738); se e a lso Oliva

re s v. TSA, 819 F.3d 454, 463- 464 (D.C . C ir. 2016) (m a te ria ls tha t we re be fore the a ge nc y at the tim e of its de te rm i nation, plus a

n a ffidavit tha

t c la rifie d the m at e ria ls, c ould be c onside re d by the c ourt).

1 6 Se e a lso W a sz c z uk v. C om m issione r, T.C . M e m o. 2020-75, a t *12 (c la ssifie r’ s findings supporte d the W B O’ s sta t e d grounds for re

je c t ing a c la im ).-29-

For e xam ple , in Tourus, 259 F.3d a t 733, the Drug Enforc e m e nt Age nc y (“ DEA” ) a

nnounc e d in a

le tte r that it wa s de ny ing a pe tition for waive r of a

bond
re quire m e nt be c a

use the pe titione r’ s “ A ffidavit of Indige nc y ” wa s “ not a de quate ly supporte d.” Noting tha

t the le tte r on its own wa s insuffic ie nt to sustain the DEA’ s de te rm i nation be c a

use it fa ile d to e xpla in the DEA’ s re a soning, id. a t 737 (c iting R oe lofs v. Se c ’ y

of the Airforc e , 628 F.2d 594, 599 (D.C . C ir. 1980)), theU.S. C ourt of Appe a ls for the Distric t of C olum bia C irc uit we nt on to c o nside r a ge nc y
m e m o randa

tha t in tha t c ourt’ s vie w fille d the ga p le ft by the DEA’ s le tte r, id.
a t 738-739. W e note two ke y distinc tions be twe e n Tourus a nd this c a se . First, the
re gula tion thec ourt c onside re d in Tourus re quire d the DEA to wa ive the bond
re quire m e nt “ [u] pon sa

tisfa c tory proof of fina

nc ia l ina bility to post the

bond,” but did not e la

borate on the pe rm i s sible re a sons for suc h a de te rm inat ion or othe rwise
c onstra in the DEA’ s de c ision m aking. Se e id. a t 735-736 (quoting 19 C .F.R
. se c . 162.47(e ) (2000)). B y c o n tra st, the re gula tions unde r se c tion 7623 de sc ribe in de ta il the two ty

pe s of de t e rm ination a

va ila ble to the W B O whe n it de c l ine s to issue an a ward (re je c tion a nd de nia l), a s we l l a s the c irc um sta nc e s tha t justify e a c h ty pe of de te rm inat ion. Se c ond, whilethe D.C . C irc uit vie we d the le tte r in Tourus
e sse ntia lly

a s sile nt a s to the ra tiona le for the a ge nc y ’ s de c ision, thele tte r he re doe s provide a ra tiona le . B ut tha

t rationa le , a s disc usse d a bove , doe s not support the-30-

de te rm i nation (a

re je c tion) re fle c te d in the W B O’ s Le tte r. Thus, thefa c t s he re are
m a te ria l ly diffe re nt from

those that we re be fore the D.C . C irc uit in Tourus. Ne ve rthe le s s, ba se d on Tourus a nd the othe r a

uthoritie s we have c ite d, we will e va luate the W B O ’ s de t e rm ination by looking be y ond the four c orne rs of the Le tte r to c onside r the re c ord m ore broa dly . The purpose of this inquiry is to de te rm i ne whe t

h e r any a spe c ts of the re c ord provide a ba sis for c ha n ging our initia

l
e va luation of theW B O’ s de c ision. As we de sc ribe be l ow, we find no suc h ba sis he re . R a the r tha

n filling a ga p le ft ope n by

the W B O Le tte r, the a dm inistra tive
re c o rd c ontra dic ts the ra t iona le tha t the W B O provide d to M r. R oge rs. Spe c ific a lly , the re c ord indic a te s tha t m ultiple re vie we rs re c om

m e nde d the
re je c tion of M r. R oge rs’ c la im ba se d on the m inim

um thre shold c rite ria

e sta blishe d by the re gula

t ions. For e xam

ple , the SB SE c la ssifie r’ s c la ssific ation she e ts m a de the following re c om

m e ndation: “ R e

j e c t the C la i m : Alle gations a re not spe c ific , c re d ible , or are spe c ulative --Alle gations a re not c re dible .” This sta t e m e nt m irrors the re quire m e nts of se c tion 301.7623-1(c )(1), Proc e d. & Adm in. R e gs., whic h
m andate s tha

t whistle blowe r c l a im s inc lude “ spe c ific an d c re dible inform ation”
and sta te s : “ Subm issions tha

t provide spe c ulative inform at ion or tha t do not provide spe c ific and c re dible inform ation * * * do not provide a ba sis for a

n-31-

award.” Se e a lso se c . 301.7623-1(c )(4), Proc e d. & Adm in. R e gs. (sta ting tha t a
c la im m a y be re je c te d if it fa ils to provide spe c ific and c re dible inform at ion a s de sc ribe d in pa

ra g ra ph (c )(1)); IRM pt. 25.2.1.1.3(7) (sta ting tha t a re je c tion is
a ppropria te if a c la im is pure l y spe c u lative or is not spe c ific or c re dible ). The
c la ssific a tion she e ts e ve n

c ite the re gula

tions in the se c tion la

be l e d “ B a sis for the R e c om m e ndation,” whic h inc lude s the following e xpla nation: Fa ilure to providesubsta

ntive inform ation, if a

v a ila ble , to support the a lle gation. R e

je c ting c la im pe r Tre a s. R e g. 301[.] 7 623-1(c )(1) for fa iling to inc lude s pe c ific and c re dible inform ation to support a pote ntia l tax viola

tion/a lle gation, a s we ll a s doc um e n tation to support the c la im
. The she e t s e l a

borate d tha

t M r. R oge rs fa ile d to providedoc um e ntation a nd “ did not providea

bre akdown of they e ars a nd how m u c h m one y

wa s be ne fitte d to TP pe r y e ar.” Se e se c . 301.7623-1(c )(1), Proc e d. & Adm in. R e gs. (sta ting tha t whistleblowe r c la i m s “ should provide substa ntive inform ation, inc luding a l l
ava ila ble doc um e ntation, tha

t supports the

whistleb lowe r’ s a lle g ations” ). The SB SE c la ssifie r, the re fore , c ould ha ve ha rdly be e n c le are r in re c om

m e nding a
re je c tion for the re a sons sta te d in subpa

ra gra phs (1) a nd (4) of se c tion 301.7623- 1(c ), Proc e d . & A d

m in. R e gs. 1 7

1 7 W e note that, in m aking his re c om m e ndation, theSB SE c la ssifie r a ppe ars to ha ve c onside re d

inform a tion be y ond the four c orne rs of M r. R o ge rs’ c la im . He a lso re vie we d the tax historie s of the ta rge t taxpa y e rs. One m ight a sk whe t he r this (c ontinue d...)-32-

Afte r the SB SE c l a ssifie r’ s re vie w, a W B O te c hnic ia

n dra fte d the AR M
-- a ddre s se d to a

W B O supe rvisor--whic h sim ila rly re c om m e nde d tha t the W B O

“ re je c t” M r. R oge rs’ c l a im . The AR M e xpla ine d tha

t the c la im ha d be e n

“ [r] e c om m e nde d for re

je c tion by

c la ssific at ion” and re c ite d the sa m e ba se s for the
re c o m m e ndation tha

t a ppe are d in e a c h of SB SE’ s c l a ssific ation she e ts. The W B O E-Trak re ports a ssoc i a te d with M r. R oge rs’ c la im we re c o nsiste nt with the

AR M , sta ting tha t the a c tion ta

ke n for e a c h c la im

num be r wa s “ C l a im

R e j e c te d: Alle gations a

re not spe c i fic , c re dible , or a re spe c ulative ,” a ga in m irroring the

1 7 (...c ontinue d ) kind of a dditiona l re se arc h, pote ntia l ly im p lic ating ta

xpa y e r inform ation within the m e aning of se c tion 301.7623-3(c )(8), Proc e d . & Adm in. R e gs., sugge sts tha t a de nia l, rathe r tha

n a re je c tion, c ould ha

ve be e n a ppropria te . W e do not think, howe v e r, tha

t the lim ite d inquiry

pe rform e d by

the SB SE c l a ssifie r in this c a se wa s inc o nsiste nt with a

re je c tion de te rm ination, pa

rtic ula rly whe n his re c om

m e ndation wa s e xpre ssly

ba se d on the re gula

tory c rite ria

for re je c tions. C om

pa re Ka nsky v. C om m issione r, T.C
. M e m o. 2020-43 (c onc luding theW B O did not a buse its disc re tion in re

je c t ing a c la im a fte r re vie w of IR S inte rna l re c ords), with Fra ntzv. C om m issione r, T.C
. M e m o. 2020-64 (c onc luding theW B O did not a buse its disc re tion in de ny i ng a

c la im a fte r re vie w of IR S inte rna l re c ords). Afte r a re vie w of M r. R oge rs’ c la im , it m a de pe rfe c t se nse for the SB SE c la ssifie r to c h e c k for anything obviously am i s s in the historie s of the ta rge t taxpa y e rs. Finding nothing that c ha nge d his a sse ssm e nt of the c la im , the SB SE c la ssifie r wa s fre e to re c o m m e nd its re

je c tion for there a sons he sta te d . The C om

m issione r a

ppe ars to a gre e tha t lim ite d re se arc h of this kind doe s not re quire a de nia l rat he r tha n a re je c tion. Se e , e .g., IR

M pt. 25.2.1.3.2(4) (M ay

28, 2020) (dire c ting c la ssifie rs to use a ll a va ila ble re sourc e s, inc luding da ta ba se s with ta

rge t taxhistorie s, in e va luating a

ny whistleb lowe r c la im ).-33-

re quire m e nts of se c tion 301.7623-1(c )(1) and (4), Proc e d. & Adm in. R e gs. 1 8 B ut
none of the se re a sons wa s inc lude d in the W B O’ s Le tte r. Inste a d, in a

situa t ion whe re only

two pa ths we re ava ila

ble to the W B O (re je c t or de ny ), the W B O Le tte r purporte d to a dopt theform e r using a justific ation for the latte r. At be st, this m ixup be tray s c onfusion in the m ind of the ultim ate de c ision m a

ke r, whe the r with re spe c t to the re quire m e nts of the re gula tions, the
re c o m m e ndations m a de by

the SB SE c la ssifie r and the W B O te c hnic ia n, or both. The supporting de c l ara tion from M r. De ha

rt, the W B O supe rvisor, pe rpe t uate s the c onfusion. Mr. De h art, to whom the AR M wa s a d dre sse d, sta

te s that both the SB SE c la ssifie r and the W B O te c hnic ia n re c om m e nde d re

je c ting M r. R oge rs’ c la im . This sta te m e nt a t le a st c om

ports with our re a ding of the
re c o rd. B ut M r. De ha

rt e la b o ra te s tha

t the W B O te c hnic ia

n’ s re c om m e n d ation wa s ba se d on “ the IR S Ope ra ting Division’ s de c i sion not to pursue pe titione r’ s Form 211 inform a tion.” Like the W B O Le tte r, the re fore , M r. De ha rt’ s de c la ra tion
a ttribute s to the SB SE c la s sifie r a de c ision theSB SE c la ssifie r ne ve r m a de --and that the re c ord doe s not sugge st he m a de --nam e l y , the de c ision not to pursue M r. R oge rs’ c la im

within the

m e aning of se c tion 301.7623-3(c )(8), Proc e d. &

1 8 Ea c h re port liste d

“ C la ssific ation” a s the re le va nt de c ision m a

k e r.-34-

Adm in. R e gs., a s oppose d to re je c t ing it sim

ply ba se d on the m inim

um thre shold
c rite ria
. 1 9 The se lf-c ontra dic tion re fle c te d in the W B O Le tte r le a v e s us una

ble to

“ re a sona bly * * * disc e rn[] ” the W B O’ s pa th. B owm a

n Transp., Inc ., 419 U.S.
a t 286. W

hat we c an disc e rn is tha

t, at e ve ry ste p be fore the W B O’ s ultim ate de c ision, IR S e m

ploy e e s re c o m

m e nde d the re

j e c tion of M r. R oge rs’ c l a im be c a use it fa ile d to sa tisfy the m inim

um thre shold c rite ria

e sta blishe d by

the re gula

tions. Give n the ra tiona le sta

te d in the W B O Le tte r, howe ve r, the ultim ate de c ision
m ake r a ppe ars to ha

ve opte d to ba se his de c ision on a

n a lte rnat ive ground. Thus, this is not a

c a se in whic h the de te rm ination le tte r is sile n t or m uddle d , but the
a dm inistra

tive re c ord c l e ars up the c onfusion. Se e , e .g., Tourus Re c ords, 259 F.3d 731. R athe r, the W B O ’ s se le c t ion of its pa rtic ula r ra tiona le , e xpre ssly

tie d to a de nia l by the re g ulations, c onflic ts with the re c om m e ndations tha

t it re c e ive d. The C om m issione r’ s e xpla

nation of the W B O’ s rat iona le doe s m ore ha rm tha n good to his c a se . The C om m issione r m a inta ins tha

t the W B O inte ntiona lly
se le c te d the “ de c ide d not to pursue ” form u lation (ra

the r tha n re ly ing on re gula

tory
c rite ria invoke d by the SB SE c la ssifie r and W B O te c hnic ia n) be c a use the W B O

1 9 M r. De ha

rt c ontinue s on to sa

y tha t none of M r. R oge rs’ Form s 211 we re forwarde d to a

n IR S e xam ine r for possiblea c t ion a nd tha t the IC E Te am

“ re je c te d pe titione r’ s c la im .” B ut the se sta te m e nts a re unhe lpful in re c o nc iling M r. De ha rt’ s othe r c om m e nts with the

re c o rd and the W B O Le tte r.-35-

wante d to a

void sugge sting tha

t M r. R oge rs c o uld pe rfe c t his c la im by subm itting
a dditiona l inform a tion. As a lre a dy disc usse d, whe n a

c la im is re je c te d (and not de nie d), the re gula

tions sta te tha t a whistleblowe r “ m ay

[that is, he is pe rm itte d to] pe rfe c t a n d re subm it” his c la im

if the re je c tion is pre m ise d on a

la c k of a de quate
e xpla nation or doc um e ntation. Se e se c . 301.7623-1(c )(4), Proc e d. & Adm in. R e gs. That option is fore c lose d whe n a c la im is de nie d. He re , the C om m issione r te lls us that the form ulation re fle c te d in the W B O Le tte r wa s inte n de d to signal to M r. R oge rs tha

t he wa s not e n title d to pe rfe c t his c la im
. 2 0 B ut the W B O is not fre e to ta ke away with double

spe ak rights tha

t the re g ulations plainly

provide . Se e B la nton, 909 F.3d a

t 1176; Re ute rs, 781 F.2d a t 951. Unde r se c tion 301.7623- 1(c )(4), Proc e d. & Adm in. R e gs., M r. R oge rs wa s e ntitle d to pe rfe c t his c la im

if it
wa s re je c te d be c a

u se it wa s spe c ulative , wa s not spe c i fic or c re d ible , or fa ile d to provide othe r inform a tion re q uire d by the re gula

tions. Se e La c e y

v.

2 0 Spe c ific a lly , the C om

m issione r stat e s, The re gula

tions le ave the * * * [W B O ] disc re tion to (1) invite the whistleblowe r to pe rfe c t a c la im and (2) re

je c t a c la i m on a ba sis tha t would a llow the whistleb lowe r to se e k to pe rfe c t or a ba sis tha t would not a llow thewhistleblowe r to se e k to pe rfe c t. He re , the * * * [W B O] c onside re d the inform ation provide d a nd the IR S Ope ra ting Division’ s e nforc e m e nt de c ision, a

nd, ultim ate ly , de c ide d to re je c t on a ba sis tha t doe s not a llow for pe rfe c tion--be c a use the IR S de c ide d

not to pursue the whistleblowe r’ s inform at ion. [R e sponde nt’ s First Supple m e nt to M otion for Sum

m ary Judgm e nt, pa

ra . 33.]-36-

C om m issione r, 153 T.C . at 161-162. The W B O fa ile d to provideM r. R oge rs with this opportunity
. As the Supre m e C ourt re c e ntly obse rve d: “ If m e n

m ust turn squa

re c orne rs whe n the y

de a l with thegove rnm e nt, it c annot be too m uc h to e xpe c t the gove rnm e nt to turn squa

re c orne rs whe n it de a ls with the m .” Niz -C h ave z v. Garlan d, 593 U.S. ___, ___, 141 S. Ct. 1474, 1486 (2021). We c annot
c ounte na nc e inte ntiona l obfusc a tion on the pa rt of the W B O. And ne i the r the W B O Le tte r a lone nor the Le tte r c ouple d with the a dm inistra tive re c ord he re provide s a

c o he re nt a c c ount of theW B O ’ s de te rm ination tha t is c o nsiste nt with the
re gula tions. Tha

t, in turn, repre se nts a

n a buse of disc re tion, a

nd a c c o rdingly

we
m ust de ny the C o m m issione r’ s m otion. 3. The C om

m issione r’ s Additional Argum e nts In his m otion a

nd the supple m e n t to his motion, theC om m issione r a tte m

pts to re sc ue the W B O’ s de te rm i nation by offe ring thre e a dditiona l a rgum e nts. W e
a ddre s s e a c h in turn.

a . R e je c tion De t e rm i nation First, the C om

m issione r c onte n ds tha

t the W B O c orre c tly re

je c t e d M r. R oge rs’ c la im

be c a u se it ba se d its de t e rm i nation on the SB SE c la ssifie r’ s
re c o m m e ndation a

nd the c onte nts of thec la im a lone . W e ne e d not ta

rry long on-37-

this a rgum e nt a s we have a ddre sse d it e xte nsive ly a bove . Se e supra

Part IV.B .1
and 2. B ut we do wish to highlight a fe w points. The C om m issione r c ite s se c tion 301.7623-3(c )(7), Proc e d. & Adm in. R e gs.,
and c onte nds tha

t a re je c tion wa s a

ppropria te he re be c a

u s e both the W B O ’ s de te rm i nation a

nd the SB SE c la ssifie r’ s re c o m m e ndat ion we re ba s e d on the fa c e of M r. R oge rs’ c la im

and not on a

ny inform ation be y ond the c la im . In the c a se of the SB SE c la ssifie r, the C om m issione r points to the

re a sons e num e ra te d in the
c la ssific a tion she e ts (e
. g., tha t M r. R oge rs’ c la im

wa s not spe c ific or c re dible or
wa s spe c u lative and tha

t M r. R oge rs fa i le d to provide doc um e ntation) a s supporting the

proposition tha

t the c la ssifie r ba se d his re c om m e n dation on the

fa c e of M r. R oge rs’ c la im
. W ith re spe c t to the W B O’ s de te rm ination, howe ve r, the C om m issione r sim

ply s tate s, without providing furthe r support, tha

t “ [u] pon
re c e iving [the ] SB SE C l a ssifie r[’ s] * * * re c om m e ndation, the * * * [W B O] did not go be y ond the fa c e of the c la im m a d e by the pe titione r in m aking the de te rm i nation to re

je c t the c la im .” 2 1 R e sponde n t’ s First Supple m e nt to M otion for Sum m ary Judgm e nt, pa

ra . 25.

2 1 Else whe re in his supplem e n t, the C om m issione r c ite s the “ Entire Adm inistra

tive R e c o rd” a s support for the proposition tha

t the W B O re

je c te d M r. R oge rs’ c la im

ba se d on his information subm ission a n d not a ny inform ation be y ond the c la im . B ut the C om m issione r doe s not point to a ny spe c ific e vide nc e that supports this the ory .-38-

The C om m issione r’ s a

rgum e nt is unpe rsua sive . To the e xte nt the C om m issione r c o nte n ds tha

t a re je c tion would ha

ve be e n the c orre c t de te rm ination unde r the re gula

tions ba se d on the inform at ion a va ila b le to the W B O, tha

t
argum e nt doe s not e sta

blish wha t the W B O a c tua lly

did. W e a gre e in light of the
re c o rd tha t the SB SE c la ssifie r and the W B O te c hnic ia n ba se d the ir
re c o m m e ndations on the

fa c e of M r. R oge rs’ c la im . B ut we hav e no wa y of knowing tha

t the de te rm ination by the W B O wa s sim ila rly lim ite d
. As we have disc usse d, the ra tiona le se le c t e d by the W B O to e xpla in its de t e rm i nation wa s diffe re nt from

the ra tiona le offe re d by

the SB SE c la ssifie r an d the W B O te c hnic ia n
and doe s not spe c i fy

what the W B O c onside re d. The C om m issione r a

ppe ars to
a c knowle dge a s m

uc h in his supple

m e nt, sta ting tha t “ [w] hile [the ] SB SE c l a ssifie r * * * re fe re nc e d Tre a s . R e g. § 301.7623-1(c ) in his a na ly sis, this wa s not the ultim a te ra t iona l e provide d by the * * * [W B O] for its re je c tion.” Id. pa

ra . 23 n.7. As m uc h a s the C om

m i ssione r m ight wish us to, we c a nnot a ttribute the SB SE
c la ssifie r’ s re a soning to the W B O’ s ultim ate de c ision m ake r whe n tha t individual spe c ific a lly

(and, a c c ording to the

C om m issione r, inte ntiona l ly ) se le c te d a diffe re nt
ra tiona le . Se e Ka spe r v. C om m issione r, 150 T.C . at 23 (in re vie wing a W B O de te rm i nation we c onside r only the grounds theW B O a c tua lly re lie d on whe n
m aking thede te rm i nation); se e a lso C h e n e ry I, 318 U.S. a t 94 (we c annot uphold a-39-

de te rm i nation “ m e re ly be c a use findings might ha

ve be e n m a de an d c onside ra tions disc lose d whic h would justify

* * * [the de t e rm i nation] ” ). The C om m issione r a lso a

rgue s tha t the inc lusion of the

phra se “ de c ide d not to pursue ” in the W B O Le tte r supports his c onte ntion tha t the W B O re

je c te d M r. R oge rs’ c la im . The C om m issione r c onc e de s tha

t a de c ision not to proc e e d ba se d on a

whistleblowe r’ s inform ation would c onstitute a de nia l unde r
se c t ion 301.7623-3(c )(8), Proc e d. & Adm in. R e gs., but c onte nds tha t a de c i sion not to pursue a

c la i m is distinc t from

a de c ision not to proc e e d. W e se e no da y light be twe e n the two phra se s. The C om m issione r is c orre c t

tha t the phra se “ did not proc e e d ba s e d on” is de fine d in the re gula

tions a n d spe c ific a lly

c ite d a s a n e xam p le of a de nia l in
se c t ion 301.7623-3(c )(8), Proc e d. & Adm in. R e gs. B ut he should ha ve re a d the
re gula tions m ore c lose l y . Se c tion 301.7623-2(b)(1), Proc e d. & Adm in. R e g s., whic h de fine s the phra s e “ proc e e ds ba se d on,” sta te s a s follows: For purpose s of se c tion 7623(b) a nd §§ 301.7623-1 through 301.7623-4, the

IR S proc e e ds ba se d on inform ation provide d by a whistleblowe r whe n the inform ation provide d substa ntia l ly c ontribute s to a

n a c tion a ga inst a

pe rson ide ntifie d by

the whistleblowe r. For e xam ple , the IR S proc e e ds ba se d on the inform ation provide d whe n the IR S initia te s a ne w a c tion, e xpa

n d s the sc ope of a n ongoing a c tion, or c ontinue s to pursue an ongoing a c tion, that the IR S would not ha ve initia te d, e xpa n de d the sc ope of, or c ontinue d to pursue , but for the inform ation provide d. The IR S doe s not proc e e d ba se d on inform ation whe n the IR S ana ly z e s the-40-

inform ation provide d or inve stiga te s a m atte r ra ise d by

the inform ation provide d. [Em pha sis a d de d.] Unde r the re gula

tions, the re fore , a

de c ision to pursue

an a c tion is e quiva le nt to a de c ision to proc e e d, se e id., a nd a de c ision not to proc e e d is grounds for a de nia l,
se e s e c . 301.7623-3(c )(8), Proc e d. & Adm i n. R e g s.; se e a lso IR M pt. 25.2.1.1.3(3). The se rule s flatly c o n tra dic t the C om m i ssione r’ s c onte ntion tha t a n IR S “ de c i[sion] not to pursue ” a

c la im would support a

re je c tion inste a d of a de nia l unde r the
re gula tions. 2 2 b. Not a

n Abuse of Disc re tion The C om m issione r ne xt c onte nds tha t the W B O did not a

b use its disc re tion whe n it re je c te d M r. R o g e rs’ c la im

ba se d on a

“ de c [ision] not to pursue ,” be c a use the re gula tions a llow for re

je c tions other tha

n those ba se d on the m inim um thre shold c rite ria

of se c tion 301.7623-1(b) a nd (c ), Proc e d. & Adm in. R e gs. M ore spe c ific a lly , the C om

m issione r a c knowle d ge s tha t the re gula

tions do not m

e ntion a de c ision not to pursue

a c la im a s a pote n tia l re a s on for re

je c ting (a s oppose d to de ny ing) the c la i m , but a

rgue s tha t the re gula

t ions in this a

re a are illustra

tive , not
e xc lusive , a

nd a re je c tion ne e d not re fe re nc e any spe c ific c rite ria . The

2 2 W e note that the C om

m issione r doe s not re que st de fe re n c e unde r Aue r v. R obbins, 519 U.S. 452 (1997), on this or a ny othe r point, pe rha

ps be c a use he re c o gniz e s tha

t he would be una

ble to sa tisfy the sta nda rd artic ulat e d by

the Supre m e C ourt in Kisor v. Wilkie , 588 U.S. ___, ___, 139 S. Ct. 2400, 2415-2418 (2019).-41-

C om m issione r furthe r c onte nds tha t re je c tions for re a sons not re fe re n c e d in the
re gula tions a re e xe m pt from the re quire m e nts of se c tion 301.7623-1(c )(4), Proc e d. & Adm in. R e gs. (providing a whistleblowe r with theopportunity to pe rfe c t his
c la im in c e rta in c irc um sta

n c e s), a nd se c t ion 301.7623-3(c )(7), Proc e d. & Adm in. R e gs. (de fining “ re

je c tion” and se tting out c e rta in proc e dura l rule s tha t a pply to
re je c tions unde r se c tion 7623(b)). In light of the

disc ussion a

bove , we ne e d not de t e rm i ne whe the r the re is a ny
c a se in whic h

the W B O c ould re

je c t a c l a im on grounds other tha

n the m inim

um
c rite ria se t out in the

re gula tions. 2 3 R athe r, it suffic e s to sa y tha t the ra tiona le
c hose n by the W B O in this c a se wa s inc om patible with a re

je c tion, a nd the re fore
we c annot sustai n it.

2 3 The re g u lations a

t se ve ra l points de sc ribe re j e c tions of c la im s “ pursua nt to § 301.7623-1(b) or (c )” w i thout m e ntioning re je c tions on other grounds. Se e se c . 301.7623-3(b)(3), (c )(7), Proc e d. & Adm in. R e gs. (providing proc e dure s for re je c ting c l a im s “ pursua

n t to § 301.7623-1(b) or (c )” ); se e a lso se c . 301.7623- 1(c )(4), Proc e d. & Adm in. R e gs. (de sc ribing proc e d ura l re quire m e nts for c e rta in re je c tions pursua

nt to subpa

ra gra phs (1), (2), a

nd (3) of tha

t se c tion). In a ddition, re gula tions unde r se c t i on 7623(a ) a s we ll a s the pre a m b le to the propose d re gula tions de s c ribe the full spe c trum of de te rm inations tha

t re sult in no a

ward a s c om prising re je c tions “ pursua nt to § 301.7623-1(b) or (c )” and de nia l s. Se e se c . 301.7623-3(b)(3), Proc e d
. & Adm i n. R e gs.; 77 Fe d. R e g . 74802 (De c . 18, 2012); se e a lso T.D. 9687, 2014-36 I.R .B . at 500 (noting tha t, on this point, the

fina l re gula tions re fle c t no substa

ntive c ha nge s a s c om

pa re d with thepropose d re gula tions).-42-
c . Our Authority

To R e vie w Fina lly , the C om

m issione r argue s tha

t, re ga rdle ss of the m e rits of the W B O’ s de te rm ination, we are pre c lude d from re vie wing the de te rm ination be c a use it re fle c ts a

n “ e nforc e m e nt de c ision” by an IR S ope ra ting division--i.e ., the
re c o m m e ndation of theSB SE c la ssifie r. In the C om m issione r’ s vie w, our Opinion in La c e y v. C om m issione r, 153 T.C . 146, whic h he ld tha t the Ta x C ourt ha s
a uthority to re vie w the W B O’ s thre shold re je c tion of a

whistleblowe r’ s c la im

for
a buse o f disc re tion, id. a

t 166-167, doe s not a ffe c t the rule tha t we la c k a

uthority to
re vie w a n IR S e nforc e m e nt de c ision not to a udit a taxpa y e r’ s re turn or othe rwise pursue a whistleblowe r’ s inform ation, se e id. a t 163-164; se e a lso C o he n v. C om m issione r, 139 T.C . at 302; C oope r v. C om m issione r, 135 T.C . at 75-76. Unlike in La c e y , 153 T.C . at 166-167, whe re the W B O a c te d a lone , the W B O in this c a se involve d a n ope rating division by

tra nsm i tting M r. R oge rs’ c la im to the SB SE c la ssifie r for c la ssific ation. TheC om m issione r c onte nds tha

t, whe n the SB SE c la ssifie r m a de his re c om m e n dation to re

j e c t M r. R oge rs’ c la i m , he
m a de an e nforc e m e n t de c i sion on be ha lf of a n IR S ope ra t ing division. The re fore , the C om m issione r argue s, our C ourt la c k s a uthority to re v i e w the W B O’ s de te rm i nation. W e disa gre e .-43-

To be gin with, a

nd a s a lre a dy

disc usse d, the C om

m issione r ha s not
e sta blishe d tha

t t he W B O ba se d its de te rm ination on the SB SE c la ssifie r’ s
re c o m m e ndation. 2 4 The C om

m issione r a dm i ts a s m

uc h, a sse rting tha

t the SB SE
c la ssifie r’ s rationa le for re je c t ion “ wa s not theultim ate ra tiona l e provide d by the * * * [W B O] for its re

je c tion,” R e sponde n t’ s First Supple m e nt to M otion for Sum m ary Judgm e nt, pa

ra . 23 n.7, a

nd tha t the W B O “ re

je c t [e d ] on a

ba sis tha t doe s not a llow for pe rfe c tion--be c a use the IR S de c ide d

not to pursue

the whistleblowe r’ s inform a tion,” id. pa ra . 33. 2 5 Ye t, the C om

m issione r trie s to ha

v e it both wa

y s. Unde r his the ory , the W B O’ s re lia

nc e on the SB SE c la ssifie r wa s c om ple t e e n o ugh to shie l d the W B O’ s de te rm i nation from

re vie w, but not so c om

ple te a s to a dopt thec la ssifie r’ s
ra tiona le . W e fa il to se e how the W B O c ould ha ve ba se d its de c ision on the SB SE
c la ssifie r’ s re c om

m e n d a tion whilesim

ulta ne ously re

je c ting his re a soning.

2 4 The SB SE c la ssifie r’ s c la ssific ation she e ts e xpre ssly sta te d tha t his re c o m m e ndation wa s to “ R e

je c t the C la im : Alle gat ions a re not spe c ific , c re dible , or are spe c ulative --Alle gat ions a re not c re dible .” The SB SE c l a ssifie r liste d the way s M r. R oge rs’ c la im

fa ile d to a dhe re to the re gula tions a nd sta te d tha t he re c o m m e nde d “ [r] e

je c ting c la im

pe r Tre a s. R e g. 301[.] 7 623-1(c )(1) for fa iling to inc l ude spe c ific and c re dible inform ation to support a pote ntia l tax viola tion/a lle gation, a s we ll a s doc um e ntation to support the c l a im .” B ut the W B O se le c te d a diffe re nt--a

nd inc onsiste nt--rationa le in its Le tte r. 2 5 The C om

m issione r a

p p e ars to c onc e de tha

t re j e c tion on the

grounds sta

te d by the SB SE c la ssifie r would ha ve a llowe d for pe rfe c tion.-44-

In any e ve nt, the involve m e nt of a n IR S ope ra ting division doe s not
a utom a t ic a lly

pre c lude our re vie w of a

W B O de te rm ination. TheC om m issione r is
c orre c t tha

t in La c e y this C ourt distinguishe d be twe e n a re je c tion de t e rm i nation
m a de by the W B O, on the one ha

nd, a nd a de te rm ination not to proc e e d with a
c la im m a de by an ope ra ting division, on the othe r. 2 6 Howe ve r, a fte r the W B O
m a de the de c i s ion unde r re vie w in La c e y , the c la im e va luation func tion of the W B O wa s re a ligne d: The ope ra tion of this func tion is now sha re d by the SB SE ope ra t ing division. Spe c ific a lly , the ve rsion of theIRM tha t wa s in e ffe c t

at the tim e the W B O c o nside re d M r. R oge rs’ c la im (and tha t re m a ins in e ffe c t

toda y ), IRM pt. 1.1.26.1.3.5 (Ja

n. 11, 2018), sta

te s a s follows for “ Initia l C l a im s Eva luation” : (1) Effe c tive July

10, 2016, * * * the

Initia l C l a im

Eva luation Te am (IC E) [of the W B O] , wa s re a ligne d to Sm a ll B usine ss/Se lf-Em ploy e d (SB /SE). IC E will c ontinue to a c t a s the prim ary re c e ipt a n d c ontrol func tion re sponsiblefor pe rform ing whistle blowe r c la i m

inta k e , m onitoring, [a

nd] aw ard proc e ssing * * *.

2 6 Spe c ific a lly , we sta

t e d tha t the “ ‘ de c ision not to a

c t on * * * [the whistleblowe r’ s] inform ation’ i s wha t we do not re v ie w,” noting tha t suc h de te rm i nations a

re m a de by ope ra ting divisions of the IR S pursua

nt to the re gula tions unde r se c t i on 7623. La c e y v. C om m issione r, 153 T.C . 146, 168 (2019) (quoting C ohe n v. C om

m i ssione r, 139 T.C
. 299, 302 (2012), a ff’ d, 550 F. App’ x 10 (D.C . C i r. 2014)). B y

c ontra st, we found tha

t the C ourt doe s ha

ve jurisdic tion to re vie w the thre shold re je c tion de te rm ination--i.e ., the de c ision to sum m a rily re je c t a c la im be c a use , on its fa c e , the c la im fa ils to m e e t m inim um re gula tory c rite ria . Id.-45-

(2) The Whistleblowe r Offic e ha s stra te gy , polic y , a dm inistra

tion, ove rsight, re vie w, a

nd re porting re sponsibility for the IR S Whistleb lowe r Program . * * * (3) SB /SE ha s ope ra tiona l re sponsibility for the IC E Unit. * * * Unde r the re a ligne d sy ste m , a fte r initia l proc e ssing by the W B O, a l l c la im s not sum m arily re je c te d (e
. g., for fa ilure to inc lude re q uire d inform ation) a

re forwarde d to the ope ra ting division for c la ssific ation. IR M pt. 25.2.1.2 (Apr. 29, 2019). An ope ra ting division c la ssifie r (like the SB SE c la ssifie r in this c a se ) the n de te rm i ne s whe the r e a c h

c la im should bere

j e c te d, de nie d, or forwa

rde d for furthe r inve stiga tion, IR M pt. 25.2.1.3.1 (M ay

28, 2020), inc l uding by

c onside ring whe the r the c la im

de sc ribe s a

spe c ific and c re dible taxissue or is pure ly spe c ulative , IRM pt. 25.2.1.3.2(5) (M ay 28, 2020). 2 7 W e do not c onside r it im

prope r for the IR S to re orga niz e itse lf to a lloc ate the initia l c la ssific at ion func tion to SB SE or othe r ope ra ting divisions a nd to a lloc ate
som e a udit de c isions to the

W B O. Se e Ta x R e lie f and He a lth C are Ac t of 2006,
se c . 406(b)(1)(B ) (providing tha t the W B O “ sha ll a

na ly z e inform ation re c e ive d from any individual * * * a

n d e ithe r inve stiga

te the m atte r itse lf or a s sign it to the
a ppropria te Inte rna l R e ve n

u e Se rvic e offic e ” ). B ut, a c c e p t ing tha t suc h a n

2 7 In this re ga

rd, the rule s tha

t we re in e ffe c t during 2019 were m ate ria lly the sam e a s the c urre nt rule s. Se e IRM pt. 25.2.1.3.1-.2 (Ja n. 11, 2018).-46-

a lloc a tion of dutie s is pe rm issible , the issue be c om e s not whic h IR S offic e m a de the d e te rm i nation but ra

t he r what the nature of tha t de te rm i nation wa s. The de te rm ination whe the r a c la im sat isfie s the m inim

um re quire m e nts of the re gula tions (i.e ., the de c ision whe the r or not to re je c t) is not e quiva le nt to a de c ision of whe the r to a c t on a whistleblowe r’ s inform ation by c om m e nc ing a

n
a udit (i.e ., the de c i sion whe the r to proc e e d ba se d on a c l a im ). The form e r is a ba sic c he c k of a

c l a im a ga inst spe c ifie d c rite ria , while the latte r is a kin to a n
e xe rc ise of disc re t ion--a

na rrow c ate gory

of a c tion long shie lde d from judic ia l
re vie w. Se e 5 U.S.C
. se c . 701(a )(2) (2018) (pre c luding judic ia l re v ie w of a ge nc y
a c tions “ c om

m itte d to a ge nc y

disc re tion by

la w” ); se e a lso He c kle r v. C ha ne y , 470 U.S. 821, 830-831 (1985) (e xpla ining tha t unde r 5 U.S.C . se c . 701(a )(2), “ re vie w is not to be

ha d” in thoserare c irc um sta nc e s whe re the re le va

nt sta t ute “ is dra

wn so that a c ourt would ha

ve no m e aningful sta

nda rd a ga inst whic h to judgethe
a ge nc y ’ s e xe rc ise of disc re tion” ). As we he ld in La c e y , whe n the W B O re je c ts a c l a im on its fa c e for fa ilure to
c onform to the m inim

um thre shold re quire m e nts se t out in the re gula tions, a n
e xpla nation is re quire d a

n d tha t e xpla nation is re vie w a

ble for a b use of disc re tion. Se e La c e y

v. C om m issione r, 153 T.C . at 168 (noting tha t a n a buse of disc re tion sta nda rd a pplie s a n d tha t the W B O’ s e xe rc ise of its disc re tion m ust c onform

with-47-

the p e rtine nt re gula

tory c rite ria ). This is so whethe r or not a n ope ra ting division
a gre e d with or pa

rtic ipat e d in the de c ision. 2 8 Put a nothe r way , the involve m e nt of
an ope ra t ing division doe s not tra nsform a thre s hold re

je c tion into a

n e xe rc ise of disc re tion tha

t is im m une from judic ia l re v ie w. 2 9 R athe r, it is the substa nc e of a de te rm i nation, not the

ide ntitie s of the a c tors involve d, tha t gove rns the an a ly sis. The a dm inistra

tive re c o rd he re doe s not show the SB SE c la ssifie r a c ting a s a de c ision m a

ke r de t e rm i ning whe the r the IR S would proc e e d with a n a udit. Inste a d, he func tione d a s a

c la ssifie r m a

king a thre shold e v a l uation of the suffic ie n c y of M r. R oge rs’ c la im , a

n d he ultim ate ly

re c om m e nde d tha

t the c l a im

be re je c te d for fa ilure to sa

tisfy the re gula

tory c rite ria . His a c tions the re fore we re c o nsiste nt with
a thre shold re

je c tion of a

c la im and do not pre c l ude our re vie w.

2 8 The C om

m issione r re lie s on a m ore re c e nt provision of the IRM , a dde d a fte r (and pe rha

ps in re sponse to) our de c ision in La c e y , to a rgue tha t a ny re c o m m e ndation by

the ope ra ting division is a n “ e n forc e m e n t de c ision” tha t pre c lude s our re v ie w. Se e IRM pt. 25.2.1.3(2) (M ay 28, 2020) (“ The re c o m m e ndation from

c l a ssific a tion re fle c ts a

n e nforc e m e nt de c ision of the ope ra t ing division.” ). This sta te m e nt, whic h the IRM re pe ats thre e tim e s in one se c t ion, se e id.; se e a lso IR M pt. 25.2.1.3.1(1), 25.2.1.3.5(1), was not in e ffe c t whe n M r. R oge rs’ c la im

wa s unde r re vie w. And, e ve n if it ha d be e n, this kind of se lf-he lp on thepa

rt of the IR S is unpe rsua sive . Our a na l y sis turns on the c onte nt of a c l a ssifie r’ s re c om

m e ndation, not the

la be l the IRM atta c he s to it.
2 9 Inde e d, if we a c c e pte d the C om m issione r’ s a

rgum e nt, the W B O’ s re a l igne d c la ssific a tion proc e ss would re sult in fe w, if a ny , c a s e s be ing subje c t to this C ourt’ s re vie w unde r La c e y .-48-

V. C onc lusion As we de sc ribe a

bove , ne ithe r the W B O Le tte r a lone nor the Le tte r c ouple d with thea dm i nistra

tive re c ord he re provide s a c ohe re n t a c c ount of theW B O ’ s de te rm i nation tha

t is c onsiste nt with the

re gula t ions. The re fore , the W B O’ s de te rm i nation c onstitute s an a buse of disc re tion. It m a

y we l l be that M r. R oge rs’
c la im is nothing m

ore tha n a pe rsona l dispute that the IR S will de c ide not to pursue
e ve n if M r. R oge rs provide s a dditiona l inform ation. Ne ve rthe l e ss, the W B O m ust
c om ply with there gula

tions, a n d M r. R oge rs is e ntitle d to tra nspa re n c y and c andor
a s to the re a sons for its ultim a te de te rm ination. W e c a nnot c o unte na

nc e inte ntiona l obfusc a tion by

the W B O, nor will weble ss a tte m pts to im prope rly shie ld c a se s from judic ia l re vie w. Ac c ordingly , we will de ny the C om m issione r’ s m otion a s supple m e nte d a

nd re m and the c a se to the W B O for furthe r c onside ra t ion. 3 0 To re fle c t the fore going,
An a ppropria te orde r will be issue d.

3 0 W e have c onside re d a ll the argum e nts m a de by the pa rtie s, a nd to the e xte nt not m e ntione d a

bove , we c onc lude the y

are m oot, irre le va

nt, or without m e rit.