T.C. M em o . 2 0 1 7 -9 0

UNITED STATES TAX COURT
AZAEL D. PERALES, Pet i t i o ner v . COM M ISSIONER OF INTERNAL REVENUE, Res po n d en t

Do ck etNo . 2 8 0 44 -1 4 W
. Fi l edM ay 2 4 , 2 0 1 7
.
Azael D. Peral es , p ro s e. Dav i dK. Barn es an d Pat ri ci a P. Dav i s , fo r res p o n d en t.

M EM ORANDUM OPINION LAUBER, J u d g e: Th i s wh i st l eb l o wer award cas e i s b efo re t h e Co u rto n a
m o ti o n fo r s u m

m ary ju d g m en tfi l edb y

the In t ern al Rev en ue Serv i ce (IRS o r res p o n den t ). Res p o n d en tco n t en d s thath e i s en t i t l edt o s umm ary ju d g m en tas a m at t er o f l aw b ecau s e t h e IRS Wh i s t leb l o wer Offi ce (Offi ce) d i dn o ti n i t i at e “ an y ad
m i n i s trat i v e o r ju d i ci al act i on ” o n th e b as i s o f t h e i n fo rm at i o n p et it i on er s up p l i ed- 2
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[* 2 ] an d d i dn o tco l l ectan y p ro ceed s as a res ul to f t hati n fo rm at io n . See s ec. 7 6 2 3 (b )(1 ). 1 W e wi l l g ran t res p o n d en t ’ s m o t io n . Back gro u n d Th e fo l l o w i n g fact s are d eri vedfro m th e p art i es ’ p l ead i n g s an dres p o n d en t ’ s
m o ti o n p ap ers , i n cl ud i n g a d ecl arat i o n an dth e ex hi b i t s at t ach edtheret o . Pet i t i o n er res id edi n Cal i fo rn i a wh enh e fi l edh is t i m el y p et i t i o n. Du ri n g 2 0 1 0 p et i t i o n er fi l edwi th th e Offi ce n u m ero u s Fo rm s 2 1 1 , Ap p l i cat i on fo r Awardfo r Ori g in al In fo rm at i o n . Th e Offi ce’ s p ro ces s i n g o f t h es e fo rm s
res u l ted i n th e as s ig n m en to f 3 4 i n d i v i du al cl ai m n u m b ers . Th es e cl ai m s al l eg ed th atv ari o u s g o v ern m en tal en t i ti es , g o v ern m en to ffi ci al s , an do th er i n d i v i dual s h ad fai l edt o en fo rce v ari o u s St at e an dFed eral l aws . Ina s eri es o f l et t ers b etw een Ap ri l 2 7 , 2 0 10 , an dSep t em b er 2 6 , 2 0 1 4 , th e Offi ce d en i edeach o f p et i t i o n er’ s ap p li cat io n s , s t at i n g t h at“ [t ] h e i n fo rm at io n p ro vi d ed d i dn o ti d en t ify a fed eral t ax i s su e up o n wh i ch th e IRS wi l l t ak e act i o n ” an dth at“ th e i n fo rm at io n y o u p ro v i d ed d i dn o t res u l ti n th e co l l ect io n o f an y p ro ceed s . ” OnOct o b er 2 8 , 2 01 4 , p et i t i on er p et i t i o n edthi s Co urtfo r rev i ew o f t h e Offi ce’ s d et erm i n at io ns . Res p o n d en ts ub s equen t l y m o v edt o d i s m i ss fo r l acko f ju

1 Al l s t atut o ry

referen ces are t o th e In t ern al Rev en u e Co de i n effect atth e rel ev an t t i m es , an d al l Ru l e referen ces are t o the Tax Co urtRu l es o f Pract ice an d Pro cedure.- 3
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[* 3 ] ri sd i ct i o n , co nt en d in g t hatth e Offi ce h add en i edth e l as to f p et i t i o n er’ s cl ai m s i n Feb ru ary

2 0 14 , m o re t h an s ev en m o n th s b efo re h e fi l edh i s p et i t io n . See s ec. 7 6 2 3 (b )(4 ) (p ro v i d i n g t h atp et i t i o n m u s tb e fi ledwi thi n 3 0 d ay s o f t h e IRS “ d et erm i n at i o n ”). On J u l y

1 6 , 2 0 1 5, we g ran t ed res p on d en t ’ s m o t i on t o d is m i ss as t o 1 7
o f p et i ti o n er’ s cl ai m s an d d en i edth e m ot i on as t o th e rem ai n i ng 1 7 . W e co n cl u dedth atthe Offi ce’ s Sep tem b er 2 6 , 2 0 14 , l et t er co n s t i tu t eda “ det erm in at io n ” wi t h
res p ectt o t h e l at t er cl ai m s an dth atth e p et i t i o n was t i m el y fi ledas t o them
. Th e 1 7 cl ai m s th atrem ai n were s et fo rt h i n s ev en Fo rm s 2 11 th at p et i t i o n er fi led bet ween J an u ary

1 6 an dJ u l y

2 6 , 2 01 0 . Inth es e cl ai m s p et i t i o n er al l eg ed frau d, was t e, ab u s e o f t ax p ay er fu n d s , an d cri m i nal l aw v i o l at i o n s b y v ari o u s Cal
i fo rn ia g o v ern m en t en t i ti es an do ffi ci al s ; b reach o f fi du ci ary du ti es b y th os e s am e Cal i fo rn i a g ov ern m en ten t i t i es an db y th e U.S. Dep art m en to f J u s ti ce; fai l ure t o
en fo rce fi du ci ary

res p o n s i b i l it i es b y th e fo reg oi n g en t i t i es an dth e IRS; an d b reach
o f du ty b y th e U.S. Co u rto f Fed eral Cl ai m s . OnOct o b er 2 8 , 2 01 6 , res p o nd en tfi l eda m o t io n fo r s u m m ary ju d g m en tu n d er Ru l e 1 2 1 . Inh i s m o t i o n res p o nd en tci tedth e Offi ce’ s d et erm i n at i o n s th atth e IRS h adn o tco m

m en cedan y

ad m i n i s trat i v e o r ju d i ci al act i o n o n th e b as i s o f t h e i n fo rm at i o n p et it i on er p ro v i d edan dth atth e IRS h adco l l ect edn o p ro ceed s as a
res u l t o f t h ati nfo rm at io n. W e o rd eredp et i t i o n er t o res p on d t o t h e m ot i o n fo r- 4
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[* 4 ] s u m m ary ju d g m en to n o r b efo re Decem ber 7 , 2 01 6 . W e em

p h as izedth ati f h e

“ d i sag ree[d ] wi th th e fact s s eto u t i n th e m o t i o n , h e s h ou l dp o i n to u tth e s p eci fi c fact s i n d i s p u t e an dex p l ai n wh y th es e fact ual d i s p u t es are i m p o rt an t .” Pet i t i o n er d i dn o t res p o ndt o o u r o rd er an dh as n o to therwi s e res p on d edt o res p on d en t ’ s m o t i on fo r s u m

m ary ju d g m en t . Di s cu ss i o n A. Su m

m ary J u dg m en tSt an d ard Th e p u rp os e o f s u m

m ary ju d g m en t i s t o ex p ed it e l i t i g at i o n an d av o i dco st l y , t i m e-co n s u m i n g , an du n n eces s ary tri al s . Fl a. Peach Co rp . v . Co m m i s si on er, 9 0 T.C. 6 7 8 , 6 8 1 (1 9 8 8 ). Th e Co urtm ay g ran t s umm ary

ju d g m en t“ up o n al l o r an y p arto f t he l eg al i s s u es i n co n tro v ers y ” wh enthere i s n o g en u i n e d i s pu t e as t o an y
m at eri al factan da d eci s i o n m ay b e ren d eredas a m at t er o f l aw. Ru l e 1 2 1 (a) an d (b ); Su n d s tran dCo rp . v . Co m m i s s i o n er, 9 8 T.C. 5 1 8 , 5 2 0 (1 9 92 ), aff’ d , 1 7 F.3 d 9 6 5 (7 th Ci r. 1 9 94 ). In d eci d i n g wh et h er t o g ran t s umm ary ju d g m en t , we co n s t ru e fact ual m at eri al s an di nferen ces drawn fro m th em i n th e l i g h tm o s t fav o rab l e t o th e
n o n m o v i n g p art y . Su nd st ran d Co rp ., 9 8 T.C. at5 2 0 . Ho wev er, t he n o n m o v i n g p art y “ m ay n o t res t up o n t h e m ere al l eg at io ns o r d en i al s” o f h i s p l ead in g s b u t i n s t ead“ m

us t setfo rt h s peci fi c fact s s h o wi n g th atth ere i s a g enu i n e d i s p u t e fo r tri al .” Ru l e 1 2 1 (d ); s ee Su nd s tran d Co rp ., 9 8 T.C. at5 2 0.- 5
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[* 5 ] Becau s e p et i t i o n er d i dn otres p o ndt o th e m o ti o n fo r s u m m ary ju d g m en t , we
co u lden t er d eci si o n ag ai n s t h i m fo r t h atreas o n al o ne. See Ru l e 1 2 1 (d ). W e wi l l
n ev erth el es s co n s i d er t h e m o t i on o n i t s m eri t s . W e co n cl u d e t hatn o m at eri al fact s are i n d i s p ut e an d th at th i s cas e i s ap pro p ri at e fo r s u m m ary ju dg m en t . B. An al y s i s A wh i s t l eb l o wer wh o p ro v i d es th e IRS wi th i nfo rm at i o n l ead i n g t o co m m en cem en to f act i o n t o co l l ectt ax es m ay b e en t it l edt o an award . Sect i o n 7 6 2 3 (b )(1 ) p ro v i d es fo r n o n d i scret i o n ary (i
. e., m an d at o ry ) award s o f at l eas t1 5 %
an d n o tm o re t h an3 0 % o f the “ co l l ect edp ro ceed s ” i f al l s t at edreq ui rem en t s are
m et . Befo re an y

awardcan b e p ai d , th e s t atu t e requ i res th atth e Secret ary fi rs t p ro ceed w i th an “ ad m i n is trat i ve o r ju d i ci al act i o n ” an dth en co l l ectp ro ceed s fro m th e t arg ett ax p ay er. See Co h en v . Co m m i s s i o ner, 1 3 9 T.C. 2 99 , 3 0 2 (2 0 12 ), aff’ d , 5 5 0 F. Ap p ’ x 1 0 (D.C. Ci r. 2 0 1 4 ); Wh is t l eb l o w er 1 41 0 6-1 0 W v . Co m m i s s i o n er, 1 3 7 T.C. 1 8 3 , 1 8 9 (2 0 1 1 ). Wh i l e we h av e ju ri s d i ct i o n t o rev iew t h e IRS’ award d et erm i n at i o n , s ect i o n 7 6 2 3 d o es n o tg i v e u s au th o ri ty t o d i rect th e IRS t o co m m en ce an ad m i n is trat i ve o r ju d i ci al act i on . See Co o p er v . Co m m is si o n er, 1 3 6 T.C. 5 9 7 , 6 0 0 -6 01 (2 0 1 1). If t h e IRS d o es n o t p ro ceed wi th an ad m in i s trat i v e o r ju d i ci al act i o n , th ere b y

d efi n i t i o n can b e n o “ co l l ect ed p ro ceed s ” an dh en ce n o wh i st l eb l o wer award . See i d
. at6 0 1
.- 6
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[* 6 ] Res p o n d en tat t ach edt o h i s m o ti o n fo r s umm ary ju d g m en ta d ecl arat i o n o f Ci n dy W i l de, o n e o f t h e Offi ce’ s l eadt ax ex am i n ers . As s h o wn i n M s . W i l d e’ s d ecl arat io n , th e Offi ce reject edal l 1 7 cl ai m s ati s su e. Th es e cl ai m s were o v erl ap p i n g an ds ub st an t ial l y i d en ti cal ; i n es s en ce, t h ey al l al l eg edb reach o f du ty o r cri m i n al l aw v io l at i o ns b y Fed eral an dSt at e g o v ern m en to ffi ci al s. Th e Offi ce’ s p ro ces s i n g u n i ts en t p et it i on er reject i o n l et t ers ad dres s in g al l 1 7 cl ai m s ; th es e l et t ers are p arto f t h e reco rd . As th es e l et t ers an dM s . W i ld e’ s d ecl arat i o n es t ab l i s h , th e Offi ce d i d n o ti ni t i at e an y ad m i n i s trat i v e o r ju d i ci al p ro ceed i ng s , an d i td i dn o t
co l l ectan y

p ro ceed s , o n the b as i s o f t h e i n fo rm at i o n p et i t i o n er p ro v i d edi n h i s Fo rm s 2 1 1 . Pet i t io n er d o es n o tal l eg e an y m at eri al d is p u te as t o th es e fact s . Th e i n it iat i o n o f an ad m i n i s trat i v e o r ju di ci al act i o n an d co l lect i o n o f t ax p ro ceed s are n eces s ary

p rereq u i s i t es t o a wh i s t leb l ower award
. See i d . at6 0 0
. Becau s e p et i t i o n er h as m etn o n e o f t h e t hres h o l d req u i rem en t s fo r a wh i st l eb l o wer award , we wi l l g ran ts u m m ary ju dg m en tfo r res p o n d en t . To refl ectthe fo reg o i n g , Anap p ro p ri at e o rd er an dd eci s i o n wi l l b e en t eredfo r res p on d en t .