157 T.C. No. 3

UNITED STATES TAX COURT

BOBBY LEE ROGERS, Petitioner v. 

COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 17985-19W. Filed August 2, 2021.

P submitted nine claims (collectively, the claim) for a

whistleblower award under I.R.C. sec. 7623 to the IRS Whistleblower

Office (WBO). The claim asserted that certain individuals had

conspired to commit “grand theft through conversion” of the assets of

P’s mother. After reviewing P’s claim, a classifier from an IRS

operating division recommended that the claim be rejected because it

failed to meet threshold criteria set out in the regulations under I.R.C.

sec. 7623. The WBO then issued P a letter purporting to reject the

claim on an alternative ground, stating: “The claim has been rejected

because the IRS decided not to pursue the information you provided.”

P timely appealed to our Court under I.R.C. sec. 7623(b)(4). 

I.R.C. sec. 7623(b) provides that we may review whistleblower award

determinations when certain monetary thresholds established in I.R.C.

sec. 7623(b)(5)(A) (relating to claims against individuals) and (B)

(relating to all claims) are satisfied. The record in this case does not

establish whether the action here satisfies these thresholds.

Served 08/02/21
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After P’s petition for review, R filed an answer that did not

address the monetary thresholds under I.R.C. sec. 7623(b)(5). R

subsequently filed a motion for summary judgment, arguing that the

WBO’s determination should be classified as a rejection and did not

represent an abuse of discretion.

Held: Consistent with our holding in Lippolis v.

Commissioner, 143 T.C. 393 (2014), which considered I.R.C.

sec. 7623(b)(5)(B), the monetary threshold set out in I.R.C.

sec. 7623(b)(5)(A) is not a jurisdictional requirement, but rather

creates an affirmative defense that must be pleaded in the answer and

proved by R.

Held, further, because R did not plead in his answer that the

action here fails to satisfy the monetary thresholds under I.R.C.

sec. 7623(b)(5), that section does not preclude us from considering the

case on the merits.

Held, further, when the WBO determines that a whistleblower

is not entitled to an award, the regulations provide for two potential

courses of action: The WBO may reject the whistleblower’s claim or

it may deny the claim; failure to follow one of the paths set out in the

regulations is an abuse of discretion.

Held, further, although the WBO’s letter purported to reject P’s

claim, the rationale included in the letter is associated with a denial

(rather than a rejection) under the regulations.

Held, further, given the rationale included in the WBO’s letter,

neither the letter alone nor the letter coupled with the administrative

record provides a coherent account of the WBO’s determination that

is consistent with the regulations; therefore, the WBO’s determination 

constitutes an abuse of discretion and cannot be upheld on review.

Held, further, the mere involvement of a classifier from an IRS

operating division in the WBO’s determination does not preclude this

Court’s review of the determination.
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Bobby Lee Rogers, pro se.

Robert J. Braxton, Timothy B. Heavner, and Bartholomew Cirenza, for

respondent.

OPINION

TORO, Judge: Section 76231 provides for awards to individuals (commonly

referred to as whistleblowers) who submit information to the Government about

third parties who have underpaid their taxes or otherwise violated the internal

revenue laws. The Whistleblower Office (“WBO”) of the Internal Revenue

Service (“IRS”) has been entrusted with the responsibility of reviewing claims

under section 7623 to determine whether a whistleblower is entitled to an award. 

The Department of the Treasury and the IRS have adopted regulations under

section 7623 that describe, among other things, actions that the WBO is

empowered to take when making award determinations, including rejections and

denials of whistleblower claims.

In this case, we consider the extent to which the WBO is constrained by the

regulations when it communicates adverse decisions to whistleblowers. 

1Unless otherwise noted, all section references are to the Internal Revenue

Code of 1986 in effect at all relevant times, and all Rule references are to the Tax

Court Rules of Practice and Procedure.
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Specifically, petitioner, Bobby Lee Rogers, has appealed, pursuant to

section 7623(b)(4), a determination of the WBO that declines to grant him an

award. Respondent, the Commissioner of Internal Revenue (the “Commissioner”),

has filed a motion for summary judgment under Rule 121, arguing that the WBO

“rejected” Mr. Rogers’ claim and that this determination was consistent with the

regulatory scheme and supported by the administrative record. But the letter that

the WBO sent to Mr. Rogers purported to reject his claim based on a rationale that

the regulations specifically associate with an alternative adverse determination, a

denial.

Under long-established administrative law, we can uphold the WBO’s

determination only on the grounds it actually relied on when making its

determination. See Kasper v. Commissioner, 150 T.C. 8, 23-24 (2018) (citing SEC

v. Chenery Corp. (Chenery I), 318 U.S. 80, 93-95 (1943), and SEC v. Chenery

Corp. (Chenery II), 332 U.S. 194, 196 (1947)). A review of the record here leaves

us unable to conclude that the determination reflected in the WBO’s letter was

consistent with the regulations. Accordingly, the WBO’s determination was an

abuse of its discretion, and we therefore must deny the Commissioner’s motion.
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Background

The facts described below are drawn from the parties’ pleadings and motion

papers, including the exhibits attached thereto and the administrative record as

certified by the Commissioner.

A. Mr. Rogers’ Award Applications

In 2019, Mr. Rogers submitted nine Forms 211, Application for Award for

Original Information, to the WBO, along with certain attachments. Mr. Rogers’

Forms 211 identified nine target taxpayers--all individuals and extended family

members or personal acquaintances of Mr. Rogers--and alleged that they had

conspired to commit “grand theft through conversion” of the assets of Mr. Rogers’

mother. The forms further alleged that the target taxpayers knowingly engaged in

a “planned offense,” through which property owned in part by Mr. Rogers’ mother

was fraudulently shifted through a variety of business entities, with the result that

she was “[divested] of her financial assets and property without her direct

knowledge or control.”

Mr. Rogers attached a number of supporting documents to his Forms 211,

including various trust instruments, affidavits, corporate filings, and news articles. 

The documents were part of an “investigation report” that Mr. Rogers had prepared
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and submitted to law enforcement agencies at the Federal, State, and local levels in

an attempt to regain ownership of his mother’s assets.2

B. WBO Review

Mr. Rogers’ Forms 211 and attachments (collectively, his claim) were

received and date-stamped by the WBO Initial Claims Evaluation (“ICE”) Team in

August 2019. The ICE Team assigned nine separate claim numbers--including one

master claim number--to Mr. Rogers’ claim and mailed him a letter acknowledging

that the WBO had received the materials. The ICE Team then routed Mr. Rogers’

claim to a classifier in the IRS Small Business Self-Employed (“SBSE”) operating

division.3 The SBSE classifier reviewed the claim and completed a classification

sheet for each of the nine separate claim numbers. The classifier made the same

recommendation on each sheet: “Reject the Claim: Allegations are not specific,

credible, or are speculative--Allegations are not credible.” On the classification 

2The package that Mr. Rogers sent to the WBO included a power of attorney

authorizing Mr. Rogers to act on his mother’s behalf. Mr. Rogers’ mother died on

July 10, 2020, and he is now the executor of her estate.

3As the Court observed in Cline v. Commissioner, T.C. Memo. 2020-35,

at *5 n.3, the operation of the claim evaluation function of the WBO--which

includes claim intake, monitoring, and awards processing--is now shared by the

SBSE operating division. See Internal Revenue Manual (“IRM”) pt. 1.1.26.1.3.5

(Jan. 11, 2018).
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sheet for the master claim number, the SBSE classifier listed the following as bases

for his recommendation:4

• TP has filed [F]orm 1040 through 2017, missing 2018.

• There are no balances due.

[5]

• WB did not provide a breakdown of the years and how much

money was benefitted to TP per year.

• The * * * [whistleblower’s information] states that TP and

associates embezzled a total of $8M since 1992.

• WB does not provide documentation to show how much money

was embezzled and when money was embezzled.

• Failure to provide substantive information, if available, to

support the allegation. Rejecting claim per Treas. Reg.

301[.]7623-1(c)(1) for failing to include specific and credible

information to support a potential tax violation/allegation, as

well as documentation to support the claim.

The WBO E-Trak report for each claim number associated with Mr. Rogers’ claim

indicates that the SBSE classifier further recommended: “Treat as a 7623(a) claim

for purposes of the rejection[.] The allegations may describe an amount greater

4The classification sheets for the remaining claim numbers were identical in

all material respects to the sheet for the master claim number, apart from minor

variations in the tax histories of the target taxpayers.

5These first two entries demonstrate that the SBSE classifier performed at

least a cursory review of each target taxpayer’s tax filings.
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than $2 million, but the claim lacks specific/credible information, is purely

speculative in nature, or does not allege a tax issue.”

A few days after the SBSE classifier completed his review, a Tax Examining

Technician for the WBO drafted an Award Recommendation Memorandum (the

“ARM”). The ARM was addressed to Keith Dehart, a supervisory Tax Examining

Technician overseeing the WBO’s ICE team. The ARM included a notation

recommending that the WBO “reject” Mr. Rogers’ claim. The ARM further

explained that the claim had been “[r]ecommended for rejection by classification.”

In addition to this “Summary Recommendation,” the ARM recited the same bases

for the recommendation that appeared in each of the SBSE classifier’s

classification sheets.

After the ARM’s preparation, the WBO did not forward Mr. Rogers’ claim

to an IRS examiner for possible action with respect to the target taxpayers. 

Instead, the ICE Team immediately issued Mr. Rogers a letter (the “WBO Letter”

or “Letter”), dated September 10, 2019, declining to grant him an award. The

Letter, which was styled “Final Decision Under Section 7623(a),” was signed by

“Layne Carver for Joseph Hebb, Program Manager Whistleblower Office, SPPA,”

and stated in relevant part:

The Whistleblower Office has considered your Form 211, Application

for Award for Original Information, dated 08/05/2019 * * * The
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Whistleblower Office has made a final decision to reject your claim

for an award.

The claim has been rejected because the IRS decided not to pursue the

information you provided.[6]

The WBO E-Trak report for each claim number associated with Mr. Rogers’ claim

lists the date the Letter was issued as the date of “Closure Action.” According to

the E-Trak reports, the action taken for each claim number was “Claim Rejected: 

Allegations are not specific, credible, or are speculative.” Each report listed

“Classification” as the relevant decision maker.

C. Tax Court Proceedings

Mr. Rogers timely appealed to this Court seeking review of the WBO’s

award determination under section 7623(b)(4). The petition repeated the

allegations from Mr. Rogers’ Forms 211 and asserted that the cash and property

converted by the target taxpayers were not “taxed appropriately” at the Federal or

the State level. Mr. Rogers also requested that the Commissioner produce certain

records to facilitate Mr. Rogers’ investigation of the target taxpayers, including

more than 50 years of tax returns and “Tax and Earnings Statements” for his

mother.

6The Letter also stated: “If you disagree with this determination, you have

30 days from the date of this letter to file a petition with the Tax Court.”
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The Commissioner filed an answer that did not address certain monetary

thresholds under I.R.C. section 7623(b)(5) discussed in greater detail below. The

Commissioner subsequently filed a motion for summary judgment under Rule 121,

along with a supporting declaration and attachments.7 Mr. Rogers responded in

opposition. On September 28, 2020, the Court held a hearing on the

Commissioner’s motion in which both parties appeared and were heard. The

Commissioner filed a supplement to his motion after the hearing.

Discussion

I. Summary Judgment

The purpose of summary judgment is to expedite litigation and avoid

unnecessary trials. Fla. Peach Corp. v. Commissioner, 90 T.C. 678, 681 (1988). 

Generally speaking, the Court may grant summary judgment when there is no

genuine dispute as to any material fact and a decision may be rendered as a matter

of law. Rule 121(b); Sundstrand Corp. v. Commissioner, 98 T.C. 518, 520 (1992),

aff’d, 17 F.3d 965 (7th Cir. 1994).

The usual summary judgment standard is less apt in a case like this one,

where we must confine ourselves to the administrative record to decide whether

7The declaration and supporting exhibits were lodged with the Court, and the

Commissioner simultaneously filed a motion for leave to file under seal the

declaration and exhibits to declaration of Keith Dehart in support of respondent’s

motion for summary judgment. The Court granted the motion to file under seal.
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there has been an abuse of discretion. See Van Bemmelen v. Commissioner,

155 T.C. 64, 78 (2020). In such a case, generally there will be no trial on the

merits. Therefore, when we review final agency action under the Administrative

Procedure Act, 5 U.S.C. secs. 551-559, 701-706 (2018), summary judgment serves

as a mechanism for deciding, as a matter of law, whether the agency action is

supported by the administrative record and is not arbitrary, capricious, an abuse of

discretion, or otherwise not in accordance with law. Van Bemmelen v.

Commissioner, 155 T.C. at 79.

II. Whistleblower Framework

A. Section 7623(a) and (b)

As we have said, section 7623 provides for awards to whistleblowers who

submit information about third parties who have underpaid their taxes or otherwise

violated the internal revenue laws. Section 7623(a) authorizes discretionary

payments in certain circumstances, while section 7623(b) provides for

nondiscretionary (i.e., mandatory) awards. Before an award may be paid, the IRS

generally must proceed with an “administrative or judicial action” and collect

proceeds from the target taxpayer. See sec. 7623(b)(1); Cohen v. Commissioner,

139 T.C. 299, 302 (2012), aff’d, 550 F. App’x 10 (D.C. Cir. 2014); see also

sec. 7623(a).
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Under section 7623(b), the WBO first determines whether a whistleblower is

entitled to a mandatory award. If an award is due, then the WBO also determines

the amount of the award. See sec. 7623(b)(1), (2), and (3). This Court has

jurisdiction to review the WBO’s determinations under section 7623(b), including

determinations that no award is due. See sec. 7623(b)(4); Lacey v. Commissioner,

153 T.C. 146, 169 (2019); see also Cooper v. Commissioner, 135 T.C. 70, 75-76

(2010). We do not, however, have authority to order the IRS to commence an

administrative or judicial action or to review its determination of the alleged tax

liability to which a whistleblower’s claim pertains. See Lacey v. Commissioner,

153 T.C. at 166; see also Cohen v. Commissioner, 139 T.C. at 302 (citing Cooper

v. Commissioner, 136 T.C. 597, 600 (2011)).

In addition, this Court generally does not review award determinations that

have been properly made under section 7623(a) as opposed to section 7623(b). 

Section 7623(a) applies if certain monetary thresholds under section 7623(b) are

not met.8 Those thresholds provide that section 7623(b), rather than

section 7623(a), applies with respect to any action if the proceeds in dispute exceed

8We note that the WBO has a practice of labeling all claims that it believes

are purely speculative or do not identify a specific or credible tax issue as

section 7623(a) claims, see IRM pt. 25.2.2.7.1(2) (Jan. 12, 2018), but those labels

do not preclude our review, see, e.g., Van Bemmelen v. Commissioner, 155 T.C.

64, 71-72 & n.6 (2020). 
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$2 million, sec. 7623(b)(5)(B), and, for an action against an individual, if the

individual’s gross income exceeds $200,000 for any taxable year subject to the

action, sec. 7623(b)(5)(A); see Smith v. Commissioner, 148 T.C. 449, 461 (2017)

(explaining that the $200,000 threshold applies to individuals and the $2 million

threshold applies to all taxpayers). We have held, however, that the $2 million

threshold set out in section 7623(b)(5)(B) is not jurisdictional. Lippolis v.

Commissioner, 143 T.C. 393, 397-398 (2014). Rather, that threshold constitutes

an affirmative defense that the Commissioner must raise in his answer and with

respect to which the Commissioner bears the burden of proof. See id. at 400. Our

reasoning and conclusions in Lippolis apply with equal force to the $200,000

threshold, and we now hold that section 7623(b)(5)(A) likewise is not

jurisdictional. Accordingly, if the Commissioner wishes to argue that we are

precluded from reviewing a determination based on either of the monetary

thresholds under section 7623(b)(5), he must so allege in his answer and must

satisfy his burden of proof.

B. Rejections and Denials

The statutory provisions governing whistleblower awards are succinct, and

the Department of the Treasury and the IRS have adopted regulations

supplementing the statutory scheme. As relevant to our decision, the regulations
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provide for two distinct types of determinations that result in no award: rejections

and denials. We describe each type of determination in greater detail below.

1. Rejection

The regulations establish certain minimum criteria that apply to all

whistleblower claims. In particular, section 301.7623-1(b), Proced. & Admin.

Regs., describes which individuals are eligible to file a claim (i.e., it addresses the

“Who may file?” question), while section 301.7623-1(c), Proced. & Admin. Regs.,

describes the information each claim should include (i.e., it addresses the “What

information must be submitted?” question). Among other things, a claim generally

must (1) include specific, credible, and nonspeculative information that the

whistleblower believes will lead to collected proceeds, (2) report a failure to

comply with the internal revenue laws and identify the person(s) believed to have

failed to comply with the internal revenue laws, and (3) provide substantive

information in support of the whistleblower’s allegations, including all available

documentation. See sec. 301.7623-1(c)(1), (4), Proced. & Admin. Regs.; see also

Lacey v. Commissioner, 153 T.C. at 160. For these purposes, a claim is considered

purely speculative if it lacks any basis or support for its allegations. See Lacey v.

Commissioner, 153 T.C. at 161.
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Under the regulations, “[a] rejection is a determination that relates solely to

the whistleblower and the information on the face of the claim that pertains to the

whistleblower.” Sec. 301.7623-3(c)(7), Proced. & Admin. Regs.; see also Internal

Revenue Manual (“IRM”) pt. 25.2.1.1.3(7) (Apr. 29, 2019) (“A rejection is a

determination that relates to the whistleblower’s eligibility to file a claim for

award, or the submission of information and claims for award (i.e., the claim did

not contain a tax issue, the information on the Form 211 was not specific/credible

information, the claim was purely speculative in nature, or the Service was unable

to identify the taxpayer based on the information provided by the

whistleblower).”).9 Accordingly, and as provided in the regulations, a rejection is

appropriate when a whistleblower’s claim fails to comply with the threshold

requirements as to who may submit a claim or what information the claim must

include. See sec. 301.7623-1(b), (c)(4), Proced. & Admin. Regs.; see also

sec. 301.7623-3(b)(3), Proced. & Admin. Regs.

9The definition of “rejection” in the current IRM is identical to the 2019

version. See IRM pt. 25.2.1.1.3(7) (May 28, 2020). We note that the provisions of

the IRM can be instructive in understanding the IRS’ interpretation of a statute, see

Ginsburg v. Commissioner, 127 T.C. 75, 87 (2006), and in ascertaining the

procedures the IRS expects its employees to follow, see Wadleigh v.

Commissioner, 134 T.C. 280, 294 (2010). The IRM, however, does not have the

force of law. See Marks v. Commissioner, 947 F.2d 983, 986 n.1 (D.C. Cir. 1991),

aff’g T.C. Memo. 1989-575; Vallone v. Commissioner, 88 T.C. 794, 807 (1987).
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Congress has entrusted to the WBO the initial evaluation of whistleblower

claims to determine whether they satisfy the minimum standards for an award.10

See Tax Relief and Health Care Act of 2006, Pub. L. No. 109-432,

sec. 406(b)(1)(B), 120 Stat. at 2960 (providing that the WBO “shall analyze

information received from any individual * * * and either investigate the matter

itself or assign it to the appropriate Internal Revenue Service office”); see also

sec. 301.7623-1(c)(4), Proced. & Admin. Regs. Accordingly, the WBO determines

whether a claim should be rejected on its face or whether further consideration is

warranted.

If a claim fails to meet the threshold criteria, depending on the

circumstances, the WBO may choose to notify the whistleblower of any

deficiencies and give him an opportunity to perfect the claim before the WBO

takes further action.11 See sec. 301.7623-1(c)(4), Proced. & Admin. Regs. Once

the WBO determines that it will reject a claim, what happens next turns on whether

the claim is subject to section 7623(a) or section 7623(b). If the claim is subject to

10As noted above, see supra note 3, the claim evaluation function of the

WBO is now shared by the SBSE operating division.

11This opportunity is available only if the deficiency relates to the contents

of the claim (i.e., the “what” question under section 301.7623-1(c)(1), (2), or (3),

Proced. & Admin. Regs.), as opposed to the eligibility of the whistleblower (i.e.,

the “who” question under section 301.7623-1(b), Proced. & Admin. Regs.). See

sec. 301.7623-1(c)(4), Proced. & Admin. Regs.
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section 7623(a), the WBO provides written notice to the whistleblower stating the

basis for the rejection without sending a preliminary rejection letter. 

Sec. 301.7623-3(b)(3), Proced. & Admin. Regs. If the WBO instead determines

that it will reject a claim under section 7623(b), it commences a “whistleblower

administrative proceeding” by sending the whistleblower a preliminary rejection

letter that states the basis for the rejection and invites the whistleblower to submit

comments. Sec. 301.7623-3(c)(7), Proced. & Admin. Regs. The WBO reviews all

comments timely submitted by the whistleblower and, if it still believes that a

rejection is appropriate, provides written notice of the rejection to the

whistleblower, again with an explanation. Id. When a claim (whether under

section 7623(a) or section 7623(b)) is rejected for failure to meet threshold criteria

other than those relating to the eligibility of the whistleblower under section

301.7623-1(b), Proced. & Admin. Regs., the regulations provide that the

whistleblower has a post-rejection opportunity to “perfect and resubmit the claim.”

See sec. 301.7623-1(c)(4), Proced. & Admin. Regs.; see also Lacey v.

Commissioner, 153 T.C. at 161-162.
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2. Denial

A “denial” is fundamentally different from a “rejection.” Under the

regulations, “[a] denial is a determination that relates to or implicates taxpayer

information.” Sec. 301.7623-3(c)(8), Proced. & Admin. Regs.; see also IRM

pt. 25.2.1.1.3(3) (“A denial is a determination that is made for reasons beyond the

information contained on the Form 211. [sic] (e.g., the Service did not proceed

based on the information provided by the whistleblower, the case was surveyed or

no changed by the operating division, the issue(s) alleged by the whistleblower

were no change issues, the issues alleged by the whistleblower were below

threshold, the statute has expired on the issues raised by the whistleblower, there

are no collected proceeds).”).12 The WBO’s denial of a claim indicates that “the

IRS either did not proceed based on the information provided by the whistleblower

* * * or did not collect proceeds” as a result of proceeding against the taxpayer on

the basis of the whistleblower’s information. Sec. 301.7623-3(c)(8), Proced. &

Admin. Regs.; see also sec. 301.7623-3(b)(3), Proced. & Admin. Regs.; T.D. 9687,

2014-36 I.R.B. 486, 500 (“[A] denial often relates to or implicates taxpayer

information (for example, because the IRS did not proceed based on the

information provided or did not collect any proceeds).”). Accordingly, a denial is a

12The definition of “denial” in the current IRM is materially identical to the

2019 version. See IRM pt. 25.2.1.1.3(3) (May 28, 2020).
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determination that is made after the WBO engages in some substantive

consideration beyond the face of a claim. See Lacey v. Commissioner, 153 T.C.

at 161-162, 168.

The WBO handles a denial of a claim similarly to a rejection. In the case of

a denial under section 7623(a), the WBO provides written notice of the denial to

the whistleblower, but does not state the basis for the denial.13

 See sec. 301.7623-

3(b)(3), Proced. & Admin. Regs. In the case of a denial under section 7623(b), the

WBO sends the whistleblower a preliminary denial letter that states the basis for

the denial and invites the whistleblower to submit comments, which starts the

whistleblower administrative proceeding to which the whistleblower is entitled

(similar to that afforded in the case of a rejection under section 7623(b)). 

13This provision of notice does not start a whistleblower administrative

proceeding. The preamble to the final regulations explains that

Treasury and the IRS considered whether to make denials of claims

under section 7623(a) subject to an administrative proceeding similar

to the denial of claims under section 7623(b). However, given the

nature of claims under section 7623(a) and the large number of such

claims, Treasury and the IRS determined that the administrative

burden of providing an administrative proceeding would significantly

outweigh the small amount of additional information that would be

provided in the denial letters. We note, however, that the same

section 6103 concerns are not present with rejection letters. 

Accordingly, in the case of a rejection under section 7623(a) or (b),

the written notice is not subject to the same limitations under section

6103 and will explain the basis for the rejection. * * * [T.D. 9687,

2014-36 I.R.B. 486, 500.]
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Sec. 301.7623-3(c)(8), Proced. & Admin. Regs. The WBO considers any timely

response from the whistleblower and, if it still believes a denial is appropriate,

provides written notice to the whistleblower so stating, including the basis for its

determination. Because a denial is based on factors beyond deficiencies on the

face of the whistleblower’s claim, the regulations do not provide the whistleblower

an opportunity to perfect his claim after a denial. Compare id. paras. (b)(3), (c)(8),

with sec. 301.7623-1(c)(4), Proced. & Admin. Regs.

III. Standard and Scope of Review

Section 7623(b)(4) provides that “[a]ny determination regarding an award”

under section 7623(b) may be “appealed to the Tax Court (and the Tax Court shall

have jurisdiction with respect to such matter).” We review the WBO’s

determinations regarding an award for abuse of discretion. See Kasper v.

Commissioner, 150 T.C. at 22-23. Abuse of discretion exists when a determination

is arbitrary, capricious, or without sound basis in fact or law. See Murphy v.

Commissioner, 125 T.C. 301, 320 (2005), aff’d, 469 F.3d 27 (1st Cir. 2006). An

agency’s failure to follow its own regulations typically is an abuse of discretion. 

See Fort Stewart Sch. v. FLRA, 495 U.S. 641, 654 (1990) (“It is a familiar rule of

administrative law that an agency must abide by its own regulations.” (citing

Vitarelli v. Seaton, 359 U.S. 535, 547 (1959) (Frankfurter, J., concurring in part,
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dissenting in part), and Service v. Dulles, 354 U.S. 363, 388 (1957))); Reuters Ltd.

v. FCC, 781 F.2d 946, 947 (D.C. Cir. 1986) (“A precept which lies at the

foundation of the modern administrative state is that agencies must abide by their

rules and regulations.”); Blanton v. Office of the Comptroller of the Currency, 909

F.3d 1162, 1176 (D.C. Cir. 2018) (citing Reuters); see also Patton v.

Commissioner, 116 T.C. 206, 210 (2001) (“[The Commissioner] is required to

follow the statute and abide by regulations reasonably based on the statute, and

failure to do so will amount to an abuse of discretion.” (citing Lansons, Inc. v.

Commissioner, 622 F.2d 774, 776 (5th Cir. 1980), aff’g 69 T.C. 773 (1978), and

Buzzetta Constr. Corp. v. Commissioner, 92 T.C. 641, 647 (1989))).

In ascertaining whether the WBO abused its discretion, we generally confine

our review to the administrative record. See Kasper v. Commissioner, 150 T.C.

at 20. In the whistleblower context, the administrative record consists of “all

information contained in the administrative claim file that is relevant to the award

determination and not protected by * * * privileges.” Sec. 301.7623-3(e)(1),

Proced. & Admin. Regs.

The Supreme Court has held that “a reviewing court, in dealing with a

determination or judgment which an administrative agency alone is authorized to

make, must judge the propriety of such action solely by the grounds invoked by the
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agency.” Chenery II, 332 U.S. at 196 (summarizing the holding of Chenery I, 318

U.S. 80). Consequently, we held in Kasper v. Commissioner, 150 T.C. at 23-24: 

Under the Chenery doctrine we can uphold the WBO’s determination

only on the grounds it actually relied on when making its

determination. * * * This means that the WBO must clearly set forth

the grounds on which it made its determination, so that we don’t have

to guess. See * * * [Chenery II, 332 U.S. at 196]. We cannot uphold

the WBO’s determination “simply because findings might have been

made and considerations might be disclosed which might justify his

ultimate conclusion.” Antioco[ v. Commissioner, T.C. Memo. 2013-

35], at *25 (citing Chenery I, 318 U.S. at 93-94).

Thus, our Court reviews a WBO determination by reference to the grounds

that it states, not by reference to post hoc rationalizations. Lacey v. Commissioner,

153 T.C. at 165. In performing this analysis, we may consider any

“contemporaneous explanation of the agency decision” contained in the record. 

Tourus Records, Inc. v. DEA, 259 F.3d 731, 738-740 (D.C. Cir. 2001) (quoting

Camp v. Pitts, 411 U.S. 138, 143 (1973)) (deciding not to remand a case involving

a letter with an insufficient explanation of an agency’s action because the record

contained contemporaneous explanations of the agency’s decision-making

rationale). We will “uphold a decision of less than ideal clarity if the agency’s path

may reasonably be discerned.” Bowman Transp., Inc. v. Ark.-Best Freight Sys.,

Inc., 419 U.S. 281, 286 (1974).
-23-

If the Court decides that the WBO abused its discretion in rejecting or

denying a whistleblower’s claim, then we can remand the case for further

consideration. See Lacey v. Commissioner, 153 T.C. at 165, 172-173;

Whistleblower 769-16W v. Commissioner, 152 T.C. 172, 181-182 (2019) (holding

that the Tax Court may in appropriate circumstances remand a whistleblower case

to the WBO for further consideration); see also Fla. Power & Light Co. v. Lorion,

470 U.S. 729, 744 (1985) (“If the record before the agency does not support the

agency action, if the agency has not considered all relevant factors, or if the

reviewing court simply cannot evaluate the challenged agency action on the basis

of the record before it, the proper course, except in rare circumstances, is to

remand to the agency for additional investigation or explanation.”).

IV. Applying the Standards to the Commissioner’s Motion

A. Section 7623(b)(5)

As we have discussed, section 7623(b) authorizes our review of WBO

determinations when two monetary thresholds set out in section 7623(b)(5) are

satisfied. We therefore begin with a procedural question: Are we precluded from

reviewing Mr. Rogers’ petition because the record does not establish that the action

here satisfies the monetary thresholds? We conclude that the answer is no.
-24-

As we held in Part II.A, neither of the monetary thresholds set out in

section 7623(b)(5) is jurisdictional. Therefore, if the Commissioner wishes to

argue that one or both of the thresholds precludes our review, he must so allege in

his answer and satisfy his burden of proof. The Commissioner has not done so

here, and we therefore proceed to consider the merits.

B. Abuse of Discretion

1. The WBO Letter

Under Chenery I, 318 U.S. at 89, we judge agency action “by the standards

which the * * * [agency] itself invoked.” See also Chenery II, 332 U.S. at 196. 

Accordingly, in reviewing the WBO’s action in this case, we turn first to its

determination: the Letter mailed to Mr. Rogers. The WBO Letter was titled “Final

Decision Under Section 7623(a)” and stated in relevant part:

The Whistleblower Office has made a final decision to reject your

claim for an award.

The claim has been rejected because the IRS decided not to pursue the

information you provided. [Emphasis added.]

On its face, the Letter states that the WBO is rejecting Mr. Rogers’ claim. 

But the WBO Letter fails to include any rationale that would support a rejection

under the regulations. See sec. 301.7623-1(b)(2), (c)(4), Proced. & Admin. Regs.

(stating that a whistleblower claim may be rejected for violating specified
-25-

minimum criteria); see also IRM pt. 25.2.1.1.3(7) (stating that a rejection is

appropriate if a claim does not raise a tax issue or is purely speculative, the

information on the Form 211 is not specific or credible, or the IRS is unable to

identify the taxpayer based on the claim). The Letter identifies no deficiencies

with respect to the “who” or “what” questions addressed in the regulations. See

sec. 301.7623-1(b)(2), (c), Proced. & Admin. Regs. Put another way, the WBO

Letter does not say that Mr. Rogers is an impermissible whistleblower. See id.

para. (b)(2) (setting out the “who” requirements). Nor does the Letter say that the

materials he submitted fell short of providing the information the regulations

required. See id. para. (c) (setting out the “what” requirements). The WBO Letter

does not address any shortcomings on Mr. Rogers’ part, which is the focus of a

rejection inquiry under the regulations. Sec. 301.7623-3(c)(7), Proced. & Admin.

Regs. (“A rejection is a determination that relates solely to the whistleblower and

the information on the face of the claim that pertains to the whistleblower.”); see

also IRM pt. 25.2.1.1.3(7) (“A rejection is a determination that relates to the

whistleblower’s eligibility to file a claim for award, or the submission of

information and claims for award[.]”).

Rather than focusing on the whistleblower and explaining what he failed to

do, as required by the rejection rules under the regulations, the WBO Letter
-26-

switches its focus to the agency itself and what the agency chose to do. Thus, the

Letter tells Mr. Rogers that “the IRS decided not to pursue the information you

provided.” While this may be a plausible explanation for a denial, it does not

explain the basis of a rejection.14 A decision “not to pursue” (i.e., “not to proceed”)

is a quasi term of art. See sec. 301.7623-3(c)(8), Proced. & Admin. Regs.

(providing for “denial” where “the IRS * * * did not proceed based on the

information provided by the whistleblower”); see also sec. 301.7623-2(b)(1),

Proced. & Admin. Regs. (noting that the IRS “proceeds based on information”

when it “continues to pursue an ongoing action” that it would not otherwise have

“continued to pursue” (emphasis added)); sec. 301.7623-3(b)(3), Proced. &

Admin. Regs. (describing a denial for purposes of section 7623(a)). It does not

support rejections.

In short, the regulatory framework gave the WBO two distinct paths for

action--rejection or denial. Having come to that “fork in the road,” the WBO

Letter followed Yogi Berra’s advice and “took it.” The Yankee great’s suggestion

was sound in context, as both prongs of the fork led to his home. But with respect

to a whistleblower award, the two prongs of the regulations lead to very different

14When a claim is rejected, it is inevitable that the IRS does not “pursue the

[whistleblower’s] information” (as the WBO’s Letter states) nor pursue a target on

the basis of that information, but to say so does not provide a reason supporting a

rejection.
-27-

places. By including the “decided not to pursue” rationale as the reason for its

purported rejection, the WBO Letter in effect said to Mr. Rogers “we reject your

claim because we are denying the claim.” This statement was self-contradictory--

and therefore impermissible--under the regulations.

We assume that WBO personnel are familiar with the rejection and denial

categories set out in the regulations and thus are puzzled by the Letter’s apparent

disregard of them.

15

 But, in any event, we will not attempt “to chisel that which

must be precise from what the agency has left vague and indecisive.” Chenery II,

332 U.S. at 197. The Commissioner has moved for summary judgment; he has the

burden of showing that the WBO’s determination is supported by the

administrative record and is not arbitrary, capricious, an abuse of discretion, or

otherwise not in accordance with law. See Van Bemmelen v. Commissioner,

155 T.C. at 78-79. Based on the contents of the WBO’s Letter alone, we are

15Apparently we are not alone in being puzzled by some of the WBO’s

communications, as that Office recently acknowledged. See WBO Mem. No.

WO-25-0621-0001 (June 1, 2021) (recounting “confusion where whistleblowers

have submitted letters, inquiries, and complaints” because of the rejection of

claims and describing revisions to internal WBO guidance to instruct classifiers

and subject matter experts who review whistleblower claims “not [to] use the terms

‘reject’ or ‘rejection’ when providing feedback for their decision to decline to

forward the whistleblower claim to the operating division’s audit/investigation

function for action,” although the “[f]eedback must [continue to] state the basis or

rationale for not taking action on the claim”).
-28-

unable to grant the Commissioner’s motion. See Reuters, 781 F.2d at 950-951;

Patton v. Commissioner, 116 T.C. at 210.

2. The Administrative Record

This conclusion does not end our inquiry. Consistent with Chenery I, a

determination letter that is silent or muddled with respect to a supportable rationale

may still be sustained if other materials in the record clarify the agency’s

reasoning. See Tourus Records, 259 F.3d at 738-740 (agency decision was

adequately supported because the record included contemporaneous explanations

of the agency’s decision-making rationale); Kasper v. Commissioner, 150 T.C.

at 24-25 (evidence from an operating division classifier adequately explained

claim’s rejection).16 Such materials cannot suggest “post hoc rationalizations for

agency action,” but are acceptable if they offer “contemporaneous explanation[s]

of the agency decision.” Kasper v. Commissioner, 150 T.C. at 24-25 (quoting

Tourus Records, 259 F.3d at 738); see also Olivares v. TSA, 819 F.3d 454, 463-

464 (D.C. Cir. 2016) (materials that were before the agency at the time of its

determination, plus an affidavit that clarified the materials, could be considered by

the court).

16See also Waszczuk v. Commissioner, T.C. Memo. 2020-75, at *12

(classifier’s findings supported the WBO’s stated grounds for rejecting a claim).
-29-

For example, in Tourus, 259 F.3d at 733, the Drug Enforcement Agency

(“DEA”) announced in a letter that it was denying a petition for waiver of a bond

requirement because the petitioner’s “Affidavit of Indigency” was “not adequately

supported.” Noting that the letter on its own was insufficient to sustain the DEA’s

determination because it failed to explain the DEA’s reasoning, id. at 737 (citing

Roelofs v. Sec’y of the Airforce, 628 F.2d 594, 599 (D.C. Cir. 1980)), the U.S.

Court of Appeals for the District of Columbia Circuit went on to consider agency

memoranda that in that court’s view filled the gap left by the DEA’s letter, id.

at 738-739. We note two key distinctions between Tourus and this case. First, the

regulation the court considered in Tourus required the DEA to waive the bond

requirement “[u]pon satisfactory proof of financial inability to post the bond,” but

did not elaborate on the permissible reasons for such a determination or otherwise

constrain the DEA’s decision making. See id. at 735-736 (quoting 19 C.F.R.

sec. 162.47(e) (2000)). By contrast, the regulations under section 7623 describe in

detail the two types of determination available to the WBO when it declines to

issue an award (rejection and denial), as well as the circumstances that justify each

type of determination. Second, while the D.C. Circuit viewed the letter in Tourus

essentially as silent as to the rationale for the agency’s decision, the letter here does

provide a rationale. But that rationale, as discussed above, does not support the
-30-

determination (a rejection) reflected in the WBO’s Letter. Thus, the facts here are

materially different from those that were before the D.C. Circuit in Tourus.

Nevertheless, based on Tourus and the other authorities we have cited, we

will evaluate the WBO’s determination by looking beyond the four corners of the

Letter to consider the record more broadly. The purpose of this inquiry is to

determine whether any aspects of the record provide a basis for changing our initial

evaluation of the WBO’s decision. As we describe below, we find no such basis

here.

Rather than filling a gap left open by the WBO Letter, the administrative

record contradicts the rationale that the WBO provided to Mr. Rogers. 

Specifically, the record indicates that multiple reviewers recommended the

rejection of Mr. Rogers’ claim based on the minimum threshold criteria established

by the regulations. For example, the SBSE classifier’s classification sheets made

the following recommendation: “Reject the Claim: Allegations are not specific,

credible, or are speculative--Allegations are not credible.” This statement mirrors

the requirements of section 301.7623-1(c)(1), Proced. & Admin. Regs., which

mandates that whistleblower claims include “specific and credible information”

and states: “Submissions that provide speculative information or that do not

provide specific and credible information * * * do not provide a basis for an
-31-

award.” See also sec. 301.7623-1(c)(4), Proced. & Admin. Regs. (stating that a

claim may be rejected if it fails to provide specific and credible information as

described in paragraph (c)(1)); IRM pt. 25.2.1.1.3(7) (stating that a rejection is

appropriate if a claim is purely speculative or is not specific or credible). The

classification sheets even cite the regulations in the section labeled “Basis for the

Recommendation,” which includes the following explanation:

Failure to provide substantive information, if available, to support the

allegation. Rejecting claim per Treas. Reg. 301[.]7623-1(c)(1) for

failing to include specific and credible information to support a

potential tax violation/allegation, as well as documentation to support

the claim.

The sheets elaborated that Mr. Rogers failed to provide documentation and “did

not provide a breakdown of the years and how much money was benefitted to TP

per year.” See sec. 301.7623-1(c)(1), Proced. & Admin. Regs. (stating that

whistleblower claims “should provide substantive information, including all

available documentation, that supports the whistleblower’s allegations”). The

SBSE classifier, therefore, could have hardly been clearer in recommending a

rejection for the reasons stated in subparagraphs (1) and (4) of section 301.7623-

1(c), Proced. & Admin. Regs.17

17We note that, in making his recommendation, the SBSE classifier appears

to have considered information beyond the four corners of Mr. Rogers’ claim. He

also reviewed the tax histories of the target taxpayers. One might ask whether this

(continued...)
-32-

After the SBSE classifier’s review, a WBO technician drafted the ARM--

addressed to a WBO supervisor--which similarly recommended that the WBO

“reject” Mr. Rogers’ claim. The ARM explained that the claim had been

“[r]ecommended for rejection by classification” and recited the same bases for the

recommendation that appeared in each of SBSE’s classification sheets. The WBO

E-Trak reports associated with Mr. Rogers’ claim were consistent with the ARM,

stating that the action taken for each claim number was “Claim Rejected: 

Allegations are not specific, credible, or are speculative,” again mirroring the

17

(...continued)

kind of additional research, potentially implicating taxpayer information within the

meaning of section 301.7623-3(c)(8), Proced. & Admin. Regs., suggests that a

denial, rather than a rejection, could have been appropriate. We do not think,

however, that the limited inquiry performed by the SBSE classifier in this case was

inconsistent with a rejection determination, particularly when his recommendation

was expressly based on the regulatory criteria for rejections. Compare Kansky v.

Commissioner, T.C. Memo. 2020-43 (concluding the WBO did not abuse its

discretion in rejecting a claim after review of IRS internal records), with Frantz v.

Commissioner, T.C. Memo. 2020-64 (concluding the WBO did not abuse its

discretion in denying a claim after review of IRS internal records). After a review

of Mr. Rogers’ claim, it made perfect sense for the SBSE classifier to check for

anything obviously amiss in the histories of the target taxpayers. Finding nothing

that changed his assessment of the claim, the SBSE classifier was free to

recommend its rejection for the reasons he stated. The Commissioner appears to

agree that limited research of this kind does not require a denial rather than a

rejection. See, e.g., IRM pt. 25.2.1.3.2(4) (May 28, 2020) (directing classifiers to

use all available resources, including databases with target tax histories, in

evaluating any whistleblower claim).
-33-

requirements of section 301.7623-1(c)(1) and (4), Proced. & Admin. Regs.18

 But

none of these reasons was included in the WBO’s Letter.

Instead, in a situation where only two paths were available to the WBO

(reject or deny), the WBO Letter purported to adopt the former using a justification

for the latter. At best, this mixup betrays confusion in the mind of the ultimate

decision maker, whether with respect to the requirements of the regulations, the

recommendations made by the SBSE classifier and the WBO technician, or both.

The supporting declaration from Mr. Dehart, the WBO supervisor,

perpetuates the confusion. Mr. Dehart, to whom the ARM was addressed, states

that both the SBSE classifier and the WBO technician recommended rejecting

Mr. Rogers’ claim. This statement at least comports with our reading of the

record. But Mr. Dehart elaborates that the WBO technician’s recommendation was

based on “the IRS Operating Division’s decision not to pursue petitioner’s

Form 211 information.” Like the WBO Letter, therefore, Mr. Dehart’s declaration

attributes to the SBSE classifier a decision the SBSE classifier never made--and

that the record does not suggest he made--namely, the decision not to pursue

Mr. Rogers’ claim within the meaning of section 301.7623-3(c)(8), Proced. &

18Each report listed “Classification” as the relevant decision maker.
-34-

Admin. Regs., as opposed to rejecting it simply based on the minimum threshold

criteria.

19

The self-contradiction reflected in the WBO Letter leaves us unable to

“reasonably * * * discern[]” the WBO’s path. Bowman Transp., Inc., 419 U.S.

at 286. What we can discern is that, at every step before the WBO’s ultimate

decision, IRS employees recommended the rejection of Mr. Rogers’ claim because

it failed to satisfy the minimum threshold criteria established by the regulations. 

Given the rationale stated in the WBO Letter, however, the ultimate decision

maker appears to have opted to base his decision on an alternative ground. Thus,

this is not a case in which the determination letter is silent or muddled, but the

administrative record clears up the confusion. See, e.g., Tourus Records, 259 F.3d

731. Rather, the WBO’s selection of its particular rationale, expressly tied to a

denial by the regulations, conflicts with the recommendations that it received.

The Commissioner’s explanation of the WBO’s rationale does more harm

than good to his case. The Commissioner maintains that the WBO intentionally

selected the “decided not to pursue” formulation (rather than relying on regulatory

criteria invoked by the SBSE classifier and WBO technician) because the WBO

19Mr. Dehart continues on to say that none of Mr. Rogers’ Forms 211 were

forwarded to an IRS examiner for possible action and that the ICE Team “rejected

petitioner’s claim.” But these statements are unhelpful in reconciling Mr. Dehart’s

other comments with the record and the WBO Letter.
-35-

wanted to avoid suggesting that Mr. Rogers could perfect his claim by submitting

additional information. As already discussed, when a claim is rejected (and not

denied), the regulations state that a whistleblower “may [that is, he is permitted to]

perfect and resubmit” his claim if the rejection is premised on a lack of adequate

explanation or documentation. See sec. 301.7623-1(c)(4), Proced. & Admin. Regs. 

That option is foreclosed when a claim is denied. Here, the Commissioner tells us

that the formulation reflected in the WBO Letter was intended to signal to

Mr. Rogers that he was not entitled to perfect his claim.

20

 But the WBO is not free

to take away with double speak rights that the regulations plainly provide. See

Blanton, 909 F.3d at 1176; Reuters, 781 F.2d at 951. Under section 301.7623-

1(c)(4), Proced. & Admin. Regs., Mr. Rogers was entitled to perfect his claim if it

was rejected because it was speculative, was not specific or credible, or failed to

provide other information required by the regulations. See Lacey v.

20Specifically, the Commissioner states,

The regulations leave the * * * [WBO] discretion to (1) invite the

whistleblower to perfect a claim and (2) reject a claim on a basis that

would allow the whistleblower to seek to perfect or a basis that would

not allow the whistleblower to seek to perfect. Here, the * * * [WBO]

considered the information provided and the IRS Operating Division’s

enforcement decision, and, ultimately, decided to reject on a basis that

does not allow for perfection--because the IRS decided not to pursue

the whistleblower’s information. [Respondent’s First Supplement to

Motion for Summary Judgment, para. 33.]
-36-

Commissioner, 153 T.C. at 161-162. The WBO failed to provide Mr. Rogers with

this opportunity.

As the Supreme Court recently observed: “If men must turn square corners

when they deal with the government, it cannot be too much to expect the

government to turn square corners when it deals with them.” Niz-Chavez v.

Garland, 593 U.S. ___, ___, 141 S. Ct. 1474, 1486 (2021). We cannot

countenance intentional obfuscation on the part of the WBO. And neither the

WBO Letter alone nor the Letter coupled with the administrative record here

provides a coherent account of the WBO’s determination that is consistent with the

regulations. That, in turn, represents an abuse of discretion, and accordingly we

must deny the Commissioner’s motion.

3. The Commissioner’s Additional Arguments

In his motion and the supplement to his motion, the Commissioner attempts

to rescue the WBO’s determination by offering three additional arguments. We

address each in turn.

a. Rejection Determination

First, the Commissioner contends that the WBO correctly rejected

Mr. Rogers’ claim because it based its determination on the SBSE classifier’s

recommendation and the contents of the claim alone. We need not tarry long on
-37-

this argument as we have addressed it extensively above. See supra Part IV.B.1

and 2. But we do wish to highlight a few points.

The Commissioner cites section 301.7623-3(c)(7), Proced. & Admin. Regs.,

and contends that a rejection was appropriate here because both the WBO’s

determination and the SBSE classifier’s recommendation were based on the face of

Mr. Rogers’ claim and not on any information beyond the claim. In the case of the

SBSE classifier, the Commissioner points to the reasons enumerated in the

classification sheets (e.g., that Mr. Rogers’ claim was not specific or credible or

was speculative and that Mr. Rogers failed to provide documentation) as

supporting the proposition that the classifier based his recommendation on the face

of Mr. Rogers’ claim. With respect to the WBO’s determination, however, the

Commissioner simply states, without providing further support, that “[u]pon

receiving [the] SBSE Classifier[’s] * * * recommendation, the * * * [WBO] did

not go beyond the face of the claim made by the petitioner in making the

determination to reject the claim.”21 Respondent’s First Supplement to Motion for

Summary Judgment, para. 25. 

21Elsewhere in his supplement, the Commissioner cites the “Entire

Administrative Record” as support for the proposition that the WBO rejected

Mr. Rogers’ claim based on his information submission and not any information

beyond the claim. But the Commissioner does not point to any specific evidence

that supports this theory.
-38-

The Commissioner’s argument is unpersuasive. To the extent the

Commissioner contends that a rejection would have been the correct determination

under the regulations based on the information available to the WBO, that

argument does not establish what the WBO actually did. We agree in light of the

record that the SBSE classifier and the WBO technician based their

recommendations on the face of Mr. Rogers’ claim. But we have no way of

knowing that the determination by the WBO was similarly limited. As we have

discussed, the rationale selected by the WBO to explain its determination was

different from the rationale offered by the SBSE classifier and the WBO technician

and does not specify what the WBO considered. The Commissioner appears to

acknowledge as much in his supplement, stating that “[w]hile [the] SBSE classifier

* * * referenced Treas. Reg. § 301.7623-1(c) in his analysis, this was not the

ultimate rationale provided by the * * * [WBO] for its rejection.” Id. para. 23 n.7. 

As much as the Commissioner might wish us to, we cannot attribute the SBSE

classifier’s reasoning to the WBO’s ultimate decision maker when that individual

specifically (and, according to the Commissioner, intentionally) selected a different

rationale. See Kasper v. Commissioner, 150 T.C. at 23 (in reviewing a WBO

determination we consider only the grounds the WBO actually relied on when

making the determination); see also Chenery I, 318 U.S. at 94 (we cannot uphold a
-39-

determination “merely because findings might have been made and considerations

disclosed which would justify * * * [the determination]”).

The Commissioner also argues that the inclusion of the phrase “decided not

to pursue” in the WBO Letter supports his contention that the WBO rejected

Mr. Rogers’ claim. The Commissioner concedes that a decision not to proceed

based on a whistleblower’s information would constitute a denial under

section 301.7623-3(c)(8), Proced. & Admin. Regs., but contends that a decision not

to pursue a claim is distinct from a decision not to proceed. We see no daylight

between the two phrases.

The Commissioner is correct that the phrase “did not proceed based on” is

defined in the regulations and specifically cited as an example of a denial in

section 301.7623-3(c)(8), Proced. & Admin. Regs. But he should have read the

regulations more closely. Section 301.7623-2(b)(1), Proced. & Admin. Regs.,

which defines the phrase “proceeds based on,” states as follows:

For purposes of section 7623(b) and §§ 301.7623-1 through

301.7623-4, the IRS proceeds based on information provided by a

whistleblower when the information provided substantially

contributes to an action against a person identified by the

whistleblower. For example, the IRS proceeds based on the

information provided when the IRS initiates a new action, expands the

scope of an ongoing action, or continues to pursue an ongoing action,

that the IRS would not have initiated, expanded the scope of, or

continued to pursue, but for the information provided. The IRS does

not proceed based on information when the IRS analyzes the
-40-

information provided or investigates a matter raised by the

information provided. [Emphasis added.]

Under the regulations, therefore, a decision to pursue an action is equivalent to a

decision to proceed, see id., and a decision not to proceed is grounds for a denial,

see sec. 301.7623-3(c)(8), Proced. & Admin. Regs.; see also IRM pt. 25.2.1.1.3(3). 

These rules flatly contradict the Commissioner’s contention that an IRS “deci[sion]

not to pursue” a claim would support a rejection instead of a denial under the

regulations.22

b. Not an Abuse of Discretion

The Commissioner next contends that the WBO did not abuse its discretion

when it rejected Mr. Rogers’ claim based on a “dec[ision] not to pursue,” because

the regulations allow for rejections other than those based on the minimum

threshold criteria of section 301.7623-1(b) and (c), Proced. & Admin. Regs. More

specifically, the Commissioner acknowledges that the regulations do not mention a

decision not to pursue a claim as a potential reason for rejecting (as opposed to

denying) the claim, but argues that the regulations in this area are illustrative, not

exclusive, and a rejection need not reference any specific criteria. The

22We note that the Commissioner does not request deference under Auer v.

Robbins, 519 U.S. 452 (1997), on this or any other point, perhaps because he

recognizes that he would be unable to satisfy the standard articulated by the

Supreme Court in Kisor v. Wilkie, 588 U.S. ___, ___, 139 S. Ct. 2400, 2415-2418

(2019).
-41-

Commissioner further contends that rejections for reasons not referenced in the

regulations are exempt from the requirements of section 301.7623-1(c)(4), Proced.

& Admin. Regs. (providing a whistleblower with the opportunity to perfect his

claim in certain circumstances), and section 301.7623-3(c)(7), Proced. & Admin.

Regs. (defining “rejection” and setting out certain procedural rules that apply to

rejections under section 7623(b)).

In light of the discussion above, we need not determine whether there is any

case in which the WBO could reject a claim on grounds other than the minimum

criteria set out in the regulations.23

 Rather, it suffices to say that the rationale

chosen by the WBO in this case was incompatible with a rejection, and therefore

we cannot sustain it.

23The regulations at several points describe rejections of claims “pursuant to

§ 301.7623-1(b) or (c)” without mentioning rejections on other grounds. See

sec. 301.7623-3(b)(3), (c)(7), Proced. & Admin. Regs. (providing procedures for

rejecting claims “pursuant to § 301.7623-1(b) or (c)”); see also sec. 301.7623-

1(c)(4), Proced. & Admin. Regs. (describing procedural requirements for certain

rejections pursuant to subparagraphs (1), (2), and (3) of that section). In addition,

regulations under section 7623(a) as well as the preamble to the proposed

regulations describe the full spectrum of determinations that result in no award as

comprising rejections “pursuant to § 301.7623-1(b) or (c)” and denials. See sec.

301.7623-3(b)(3), Proced. & Admin. Regs.; 77 Fed. Reg. 74802 (Dec. 18, 2012);

see also T.D. 9687, 2014-36 I.R.B. at 500 (noting that, on this point, the final

regulations reflect no substantive changes as compared with the proposed

regulations).
-42-

c. Our Authority To Review

Finally, the Commissioner argues that, regardless of the merits of the

WBO’s determination, we are precluded from reviewing the determination because

it reflects an “enforcement decision” by an IRS operating division--i.e., the

recommendation of the SBSE classifier. In the Commissioner’s view, our Opinion

in Lacey v. Commissioner, 153 T.C. 146, which held that the Tax Court has

authority to review the WBO’s threshold rejection of a whistleblower’s claim for

abuse of discretion, id. at 166-167, does not affect the rule that we lack authority to

review an IRS enforcement decision not to audit a taxpayer’s return or otherwise

pursue a whistleblower’s information, see id. at 163-164; see also Cohen v.

Commissioner, 139 T.C. at 302; Cooper v. Commissioner, 135 T.C. at 75-76.

Unlike in Lacey, 153 T.C. at 166-167, where the WBO acted alone, the

WBO in this case involved an operating division by transmitting Mr. Rogers’ claim

to the SBSE classifier for classification. The Commissioner contends that, when

the SBSE classifier made his recommendation to reject Mr. Rogers’ claim, he

made an enforcement decision on behalf of an IRS operating division. Therefore,

the Commissioner argues, our Court lacks authority to review the WBO’s

determination. We disagree.
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To begin with, and as already discussed, the Commissioner has not

established that the WBO based its determination on the SBSE classifier’s

recommendation.24 The Commissioner admits as much, asserting that the SBSE

classifier’s rationale for rejection “was not the ultimate rationale provided by the

* * * [WBO] for its rejection,” Respondent’s First Supplement to Motion for

Summary Judgment, para. 23 n.7, and that the WBO “reject[ed] on a basis that

does not allow for perfection--because the IRS decided not to pursue the

whistleblower’s information,” id. para. 33.25

Yet, the Commissioner tries to have it both ways. Under his theory, the

WBO’s reliance on the SBSE classifier was complete enough to shield the WBO’s

determination from review, but not so complete as to adopt the classifier’s

rationale. We fail to see how the WBO could have based its decision on the SBSE

classifier’s recommendation while simultaneously rejecting his reasoning.

24The SBSE classifier’s classification sheets expressly stated that his

recommendation was to “Reject the Claim: Allegations are not specific, credible,

or are speculative--Allegations are not credible.” The SBSE classifier listed the

ways Mr. Rogers’ claim failed to adhere to the regulations and stated that he

recommended “[r]ejecting claim per Treas. Reg. 301[.]7623-1(c)(1) for failing to

include specific and credible information to support a potential tax

violation/allegation, as well as documentation to support the claim.” But the WBO

selected a different--and inconsistent--rationale in its Letter.

25The Commissioner appears to concede that rejection on the grounds stated

by the SBSE classifier would have allowed for perfection.
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In any event, the involvement of an IRS operating division does not

automatically preclude our review of a WBO determination. The Commissioner is

correct that in Lacey this Court distinguished between a rejection determination

made by the WBO, on the one hand, and a determination not to proceed with a

claim made by an operating division, on the other.26

 However, after the WBO

made the decision under review in Lacey, the claim evaluation function of the

WBO was realigned: The operation of this function is now shared by the SBSE

operating division. Specifically, the version of the IRM that was in effect at the

time the WBO considered Mr. Rogers’ claim (and that remains in effect today),

IRM pt. 1.1.26.1.3.5 (Jan. 11, 2018), states as follows for “Initial Claims

Evaluation”:

(1) Effective July 10, 2016, * * * the Initial Claim Evaluation Team

(ICE) [of the WBO], was realigned to Small Business/Self-Employed

(SB/SE). ICE will continue to act as the primary receipt and control

function responsible for performing whistleblower claim intake,

monitoring, [and] award processing * * *.

26Specifically, we stated that the “‘decision not to act on * * * [the

whistleblower’s] information’ is what we do not review,” noting that such

determinations are made by operating divisions of the IRS pursuant to the

regulations under section 7623. Lacey v. Commissioner, 153 T.C. 146, 168 (2019)

(quoting Cohen v. Commissioner, 139 T.C. 299, 302 (2012), aff’d, 550 F. App’x

10 (D.C. Cir. 2014)). By contrast, we found that the Court does have jurisdiction

to review the threshold rejection determination--i.e., the decision to summarily

reject a claim because, on its face, the claim fails to meet minimum regulatory

criteria. Id.
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(2) The Whistleblower Office has strategy, policy, administration,

oversight, review, and reporting responsibility for the IRS

Whistleblower Program. * * *

(3) SB/SE has operational responsibility for the ICE Unit. * * *

Under the realigned system, after initial processing by the WBO, all claims

not summarily rejected (e.g., for failure to include required information) are

forwarded to the operating division for classification. IRM pt. 25.2.1.2 (Apr. 29,

2019). An operating division classifier (like the SBSE classifier in this case) then

determines whether each claim should be rejected, denied, or forwarded for further

investigation, IRM pt. 25.2.1.3.1 (May 28, 2020), including by considering

whether the claim describes a specific and credible tax issue or is purely

speculative, IRM pt. 25.2.1.3.2(5) (May 28, 2020).27

We do not consider it improper for the IRS to reorganize itself to allocate the

initial classification function to SBSE or other operating divisions and to allocate

some audit decisions to the WBO. See Tax Relief and Health Care Act of 2006,

sec. 406(b)(1)(B) (providing that the WBO “shall analyze information received

from any individual * * * and either investigate the matter itself or assign it to the

appropriate Internal Revenue Service office”). But, accepting that such an

27

In this regard, the rules that were in effect during 2019 were materially the

same as the current rules. See IRM pt. 25.2.1.3.1-.2 (Jan. 11, 2018).
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allocation of duties is permissible, the issue becomes not which IRS office made

the determination but rather what the nature of that determination was.

The determination whether a claim satisfies the minimum requirements of

the regulations (i.e., the decision whether or not to reject) is not equivalent to a

decision of whether to act on a whistleblower’s information by commencing an

audit (i.e., the decision whether to proceed based on a claim). The former is a

basic check of a claim against specified criteria, while the latter is akin to an

exercise of discretion--a narrow category of action long shielded from judicial

review. See 5 U.S.C. sec. 701(a)(2) (2018) (precluding judicial review of agency

actions “committed to agency discretion by law”); see also Heckler v. Chaney, 470

U.S. 821, 830-831 (1985) (explaining that under 5 U.S.C. sec. 701(a)(2), “review

is not to be had” in those rare circumstances where the relevant statute “is drawn so

that a court would have no meaningful standard against which to judge the

agency’s exercise of discretion”).

As we held in Lacey, when the WBO rejects a claim on its face for failure to

conform to the minimum threshold requirements set out in the regulations, an

explanation is required and that explanation is reviewable for abuse of discretion. 

See Lacey v. Commissioner, 153 T.C. at 168 (noting that an abuse of discretion

standard applies and that the WBO’s exercise of its discretion must conform with
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the pertinent regulatory criteria). This is so whether or not an operating division

agreed with or participated in the decision.28 Put another way, the involvement of

an operating division does not transform a threshold rejection into an exercise of

discretion that is immune from judicial review.29 Rather, it is the substance of a

determination, not the identities of the actors involved, that governs the analysis.

The administrative record here does not show the SBSE classifier acting as a

decision maker determining whether the IRS would proceed with an audit. Instead,

he functioned as a classifier making a threshold evaluation of the sufficiency of

Mr. Rogers’ claim, and he ultimately recommended that the claim be rejected for

failure to satisfy the regulatory criteria. His actions therefore were consistent with

a threshold rejection of a claim and do not preclude our review.

28The Commissioner relies on a more recent provision of the IRM, added

after (and perhaps in response to) our decision in Lacey, to argue that any

recommendation by the operating division is an “enforcement decision” that

precludes our review. See IRM pt. 25.2.1.3(2) (May 28, 2020) (“The

recommendation from classification reflects an enforcement decision of the

operating division.”). This statement, which the IRM repeats three times in one

section, see id.; see also IRM pt. 25.2.1.3.1(1), 25.2.1.3.5(1), was not in effect

when Mr. Rogers’ claim was under review. And, even if it had been, this kind of

self-help on the part of the IRS is unpersuasive. Our analysis turns on the content

of a classifier’s recommendation, not the label the IRM attaches to it.

29

Indeed, if we accepted the Commissioner’s argument, the WBO’s

realigned classification process would result in few, if any, cases being subject to

this Court’s review under Lacey.
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V. Conclusion

As we describe above, neither the WBO Letter alone nor the Letter coupled

with the administrative record here provides a coherent account of the WBO’s

determination that is consistent with the regulations. Therefore, the WBO’s

determination constitutes an abuse of discretion. It may well be that Mr. Rogers’

claim is nothing more than a personal dispute that the IRS will decide not to pursue

even if Mr. Rogers provides additional information. Nevertheless, the WBO must

comply with the regulations, and Mr. Rogers is entitled to transparency and candor

as to the reasons for its ultimate determination. We cannot countenance intentional

obfuscation by the WBO, nor will we bless attempts to improperly shield cases

from judicial review. Accordingly, we will deny the Commissioner’s motion as

supplemented and remand the case to the WBO for further consideration.30

To reflect the foregoing, 

An appropriate order will be issued.

30We have considered all the arguments made by the parties, and to the

extent not mentioned above, we conclude they are moot, irrelevant, or without

merit.