Court Opinion

ID: 4340996
Source: CourtListenerOpinion
Date Created: 2018-11-14 08:52:38.727777+00
Date Added: 2024-06-11T14:21:14.280138
License: Public Domain

T.C. Memo. 2018-34

                         UNITED STATES TAX COURT

               WHISTLEBLOWER 23711-15W, Petitioner v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent

      Docket No. 23711-15W.                         Filed March 20, 2018.

      Sealed, pro se.

      Patricia P. Davis and Kevin G. Gillin, for respondent.

                           MEMORANDUM OPINION

      LAUBER, Judge: This whistleblower award case is before the Court on a

motion for summary judgment filed by the Internal Revenue Service (IRS or re-

spondent). Respondent contends that he is entitled to summary judgment as a mat-

ter of law because the IRS did not initiate “any administrative or judicial action”

on the basis of the information petitioner supplied and did not collect any proceeds
                                       -2-

[*2] as a result of that information. See sec. 7623(b)(1).1 We will grant respon-

dent’s motion.

                                   Background

       The following facts are derived from the parties’ pleadings and motion pa-

pers, including the declarations and exhibits attached thereto. On March 20, 2009,

petitioner submitted Form 211, Application for Award for Original Information, to

the IRS Whistleblower Office (Office).2 His Form 211 outlined information about

a primary taxpayer (Target) and three related taxpayers. Petitioner had previously

been employed as an attorney by a law firm that represented Target. He alleged

that Target and the related taxpayers had engaged in tax evasion using offshore

entities.

       The IRS assigned separate claim numbers to petitioner’s claims regarding

Target and the related taxpayers, viz., claim Nos. 2009-001459 through 2009-

001462 (claims at issue). Whistleblower Analyst Applebaum was assigned to re-

       1
       All statutory references are to the Internal Revenue Code in effect at the
relevant times, and all Rule references are to the Tax Court Rules of Practice and
Procedure.
       2
        The Court granted petitioner’s motion to proceed anonymously. When re-
ferring to petitioner, we will employ the masculine pronoun and possessive adjec-
tive without intending to create any implication concerning petitioner’s gender.
                                        -3-

[*3] view these claims. On April 20, 2009, she sent the information supplied by

petitioner to the IRS Criminal Investigations Division (CID).

      In January 2010 petitioner was interviewed by three CID officers, including

Supervisory Special Agent (SSA) Schumacher. Petitioner alleges that during this

interview he described in detail the operational structure that Target used to effect

the alleged tax evasion. Petitioner alleges that the interviewers told him that “they

were moving against Target.” At their request, petitioner allegedly outlined what

documents they should request from Target.

      After interviewing petitioner, SSA Schumacher sent the case file to IRS

Criminal Tax (CT) Counsel for a determination as to the status of petitioner’s in-

formation. On April 19, 2010, after receiving CT Counsel’s advice, SSA Schu-

macher completed Form 11369, Confidential Evaluation Report on Claim for

Award, recommending that no award be made. Line 9 of this form inquires

whether a decision was made “to conduct an audit or investigation of the tax-

payer.” If not, and if “the case was surveyed or not examined,” the officer com-

pleting the form is instructed to “attach a brief explanation.” SSA Schumacher

attached the following explanation:

      CT Counsel evaluated the information and avowed that the infor-
      mation provided by the informant is subject to the attorney-client
      privilege and cannot be used as a source of the investigation. It is the
                                        -4-

[*4] opinion of CT Counsel that * * * [Target] maintains a privilege with
     the firm that was hired, not the specific attorney or personnel assigned
     to the client’s account. Therefore, even though the informant was not
     assigned to work on * * * [Target’s] account, the information main-
     tained by the firm, not the individual, is privileged. Consequently,
     the specific information relative to * * * [Target] that the informant
     provided is considered to have the attorney-client privilege and can-
     not be used to further develop this allegation. The additional infor-
     mation submitted by the informant is generic and is not helpful to
     develop the allegations.

      On August 16, 2010, the Office received from SSA Schumacher the Form

11369 described above, with an attached memorandum from CT Counsel. As far

as the record reveals, the Office took no action on the four claims at issue during

the ensuing four years. On June 26, 2014, Ms. Applebaum signed the Form

11369, concurring in SSA Schumacher’s recommendation that no award be made.

The director of the Office approved her recommendation, and the IRS sent peti-

tioner a letter dated June 27, 2014, stating its adverse determination with respect

to the claims at issue. The letter explained:

      [A]n award can be made only if the information provided results in
      the collection of additional tax, penalties, interest, or other proceeds.
      In this case, the information you provided did not result in the col-
      lection of any proceeds. Therefore, you are not eligible for an award.

      Petitioner had moved to a new address and did not receive the June 27,

2014, letter. In September 2015 he emailed the Office to inquire about the status

of the 14 claims he then had pending, including the four claims at issue. Senior
                                        -5-

[*5] Tax Analyst Borenstein responded to his inquiry. (Ms. Applebaum had left

the Office in May 2015, and Ms. Borenstein assumed responsibility for some of

petitioner’s claims.) By letter dated September 9, 2015, Ms. Borenstein informed

petitioner that 10 of his claims were “still open and under consideration” but that

the 4 claims at issue “were closed by Analyst D. Applebaum on June 27, 2014.”

Ms. Borenstein attached an unsigned copy of the June 27, 2014, letter.

      On September 21, 2015, petitioner petitioned this Court for review of the

Office’s determination. He alleged that the September 9 letter “was the first and

only indication” he had received that the Office had denied the four claims at is-

sue. He urged that the September 9 letter should be treated as the “determination

regarding [his] award” and that his petition, having been filed within 30 days of

that determination, was thus timely. See sec. 7623(b)(4). On the merits, petitioner

alleged “upon reliable information and belief” that the IRS had in fact collected

substantial proceeds from Target.

      On April 14, 2016, respondent moved to dismiss this case for lack of juris-

diction, noting that the petition had not been filed within 30 days of the Office’s

June 27, 2014, letter. Petitioner timely responded to that motion. On November

16, 2016, respondent moved to withdraw his motion to dismiss, admitting that the

Office had no “direct evidence” concerning the mailing of the June 27, 2014, let-
                                         -6-

[*6] ter. By order dated November 21, 2016, we directed that respondent’s motion

to dismiss for lack of jurisdiction was “deemed withdrawn.”

      On November 30, 2016, respondent filed a motion for summary judgment,

to which petitioner timely responded. We denied that motion on February 22,

2017. Viewing the facts and drawing inferences therefrom in the light most favor-

able to petitioner as the non-moving party, we concluded that material disputes of

fact then existed as to whether the IRS had collected proceeds from Target on the

basis of information brought to the Secretary’s attention by petitioner.

      In response to petitioner’s informal discovery requests, respondent provided

him (pursuant to a protective order) copies of the Office’s administrative claim

file, IRS records relating to Target and the related taxpayers, and declarations from

IRS personnel. Petitioner expressed dissatisfaction with this response. Respond-

ent then filed, on July 20, 2017, a second motion for summary judgment.

      In support of his second motion respondent supplied a declaration from SSA

Schumacher, the CID officer who had interviewed petitioner. Mr. Shumacher

averred that: (1) he was instructed by CT Counsel to forgo any investigation of

Target because petitioner’s information was privileged or “tainted”; (2) he was

further instructed to put petitioner’s information into a folder “not to be used for

any investigation” and to place any subsequent information supplied by petitioner
                                         -7-

[*7] into that same folder; (3) complying with these instructions, he had closed his

preliminary investigation of Target and put all information supplied by petitioner

“into an electronic folder, which [he] did not further access”; and (4) “at no time

did [he] provide petitioner’s information to any other office within the IRS, other

than the CT Counsel.”

      As additional support for his second motion for summary judgment, re-

spondent supplied declarations from Ms. Applebaum and Ms. Borenstein. Ms.

Applebaum averred that: (1) after receiving CT Counsel’s analysis, she decided

that petitioner’s information would not be sent “to any other IRS office for further

evaluation”; (2) none of the information petitioner supplied was thereafter “uti-

lized by respondent in any way”; and (3) her conclusion that petitioner was not

entitled to an award “was based on the fact that respondent had not taken any

administrative or judicial action against * * * [Target] or any related entities, or

collected any proceeds from any taxpayer based on petitioner’s information.”

      Ms. Borenstein averred that she had queried the IRS Integrated Data Re-

trieval System (IDRS) to review the audit history of Target and the related tax-

payers for tax years 2009 through 2014. For Target, the only tax year that showed

any audit activity was 2013. That activity consisted, not of an examination, but of

a survey “that did not result in any adjustment” for Target’s 2013 tax year. Ms.
                                        -8-

[*8] Borenstein averred that she had similarly reviewed IDRS records for the rela-

ted taxpayers and ascertained that “the IRS ha[d] not made adjustments to any of

the related taxpayers’ returns for tax years 2009 through 2014.”

      Ms. Borenstein attached to her declaration a copy of the IDRS printout for

Target. On November 21, 2017, respondent filed a supplemental declaration from

Ms. Borenstein to which were attached IDRS printouts for the related taxpayers.

These records show that the IRS did not examine (1) any of Target’s returns for

2009 through 2014 or (2) any of the related taxpayers’ returns for 2009 through

2014, with the exception of one related taxpayer’s return for 2009. These records

also show that the IRS did not collect from Target or the related taxpayers for any

of these years, apart from amounts self-reported on their returns, any tax, penalty,

interest, or other proceeds.

                                     Discussion

A.    Jurisdiction

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

* * * may, within 30 days of such determination, be appealed to the Tax Court

(and the Tax Court shall have jurisdiction with respect to such matter).” This stat-

ute is unusual as a jurisdiction-conferring provision because it does not prescribe

any particular form of notice to the would-be petitioner. See Whistleblower 4496-
                                         -9-

[*9] 15W v. Commissioner, 148 T.C. __, __ (slip op. at 12) (May 25, 2017). In

prior cases “[w]e have held that the name or label of a document does not control

whether the document constitutes a determination” and that “our jurisdiction is

established when the Commissioner issues a written notice that embodies a deter-

mination.” Cooper v. Commissioner, 135 T.C. 70, 75 (2010).

      The 30-day period within which a petition must be filed “begins on the date

of mailing or personal delivery of the determination to the whistleblower at his last

known address.” Kasper v. Commissioner (Kasper I), 137 T.C. 37, 45 (2011).

The IRS “must prove by direct evidence the date and fact of mailing or personal

delivery of the notice to the whistleblower.” Ibid.; see Allibone v. Commissioner,

T.C. Memo. 2016-91, 111 T.C.M. (CCH) 1404, 1405-1406. When moving to

withdraw his motion to dismiss this case, respondent admitted that he had no di-

rect evidence of the date and fact of mailing of the June 27, 2014, denial letter to

petitioner.

      Although “litigants cannot stipulate to jurisdiction,” the parties (absent im-

proper collusion) “may agree on the facts that determine jurisdiction.” Tilden v.

Commissioner, 846 F.3d 882, 887 (7th Cir. 2017) (emphasis in original), rev’g and

remanding T.C. Memo. 2015-188; Pearson v. Commissioner, 149 T.C. __, __ (slip

op. at 13) (Nov. 29, 2017). Because respondent admits that he lacks “direct evi-
                                        - 10 -

[*10] dence” concerning the date and fact of mailing of the June 27, 2014, letter,

that document did not trigger the running of the 30-day filing period. The only

other letter by which the Office communicated to petitioner its determination

concerning the four claims at issue was the September 9, 2015, letter. Because

petitioner petitioned this Court within 30 days of that determination letter, his

petition was timely, and we have jurisdiction under section 7623(b)(4) to decide

this case.

B.    Standard and Scope of Review

      We review the Secretary’s determination as to whether a whistleblower is

entitled to an award under section 7623(b)(1) by applying an abuse-of-discretion

standard. Kasper v. Commissioner (Kasper II), 150 T.C. __, __ (slip op. at 23)

(Jan. 9, 2018). Abuse of discretion exists when a determination is arbitrary, ca-

pricious, or without sound basis in fact or law. Murphy v. Commissioner, 125

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

       In ascertaining whether the Secretary abused his discretion, we generally

confine our review to the administrative record. Kasper II, 150 T.C. at __ (slip op.

at 20). “The administrative record comprises all information contained in the ad-

ministrative claim file that is relevant to the award determination and not protected

by * * * privileges.” Sec. 301.7623-3(e)(1), Proced. & Admin. Regs. Respondent
                                       - 11 -

[*11] may supplement the administrative record (or we may direct that he do so)

for a variety of reasons, e.g., where the IRS action is not adequately explained in

the administrative record or where the IRS in making its determination relied on

information not included in the record it compiled. See, e.g., Wilson v. Commis-

sioner, 705 F.3d 980, 991 (9th Cir. 2013) (acknowledging that a “reviewing court

may require supplementation of the administrative record if it is incomplete”

(quoting Lands Council v. Powell, 395 F.3d 1019, 1030 (9th Cir. 2005))), aff’g

T.C. Memo. 2010-134; Tri-Valley CAREs v. DOE, 671 F.3d 1113, 1130 (9th Cir.

2012); Esch v. Yeutter, 876 F.2d 976, 991 (D.C. Cir. 1989); Kasper II, 150 T.C. at

__ (slip op. at 20-21).

      The documents respondent submitted to support his second motion for

summary judgment include the declarations of SSA Schumacher, Ms. Applebaum,

and Ms. Borenstein, plus the IDRS records accompanying Ms. Borenstein’s decla-

rations. These documents were not part of the administrative claim file originally

compiled by the Office. Petitioner objects to our consideration of these docu-

ments, urging that respondent “seeks to supplement the * * * administrative claim

file with non-contemporaneous information that Ms. Applebaum did not use or

base her decision on.”
                                        - 12 -

[*12] We reject this argument. In her June 27, 2014, letter Ms. Applebaum clear-

ly expressed the ground on which the Office principally relied in denying petition-

er’s claims, namely, that “the information you provided did not result in the collec-

tion of any proceeds.” Where a contemporaneous explanation of the agency action

exists, a reviewing court may appropriately supplement the administrative record,

by declaration or otherwise, to include information that clarifies the basis for that

agency action. See, e.g., Camp v. Pitts, 411 U.S. 138, 142-143 (1973); Esch, 876

F.2d at 991; Klingenberg v. Commissioner, T.C. Memo. 2011-247, 102 T.C.M.

(CCH) 398, 401 (ruling that testimony of IRS settlement officer explaining “why

he made his administrative determinations is not extrarecord evidence”), aff’d, 551

F. App’x 354 (9th Cir. 2014); cf. Theodore Roosevelt Conservation P’Ship v.

Salazar, 616 F.3d 497, 514 (D.C. Cir. 2010) (noting that resorting to extra-record

information “to determine whether administrative record is deficient * * * is the

exception, not the rule”).

      Here, the declarations of Ms. Applebaum, SSA Schumacher, and Ms. Bor-

enstein (who took over for Ms. Applebaum after she left the Office) explain more

fully the basis for the Office’s determination that Ms. Applebaum articulated in

2014. Ms. Applebaum signed the Form 11369 recommending denial of an award,

and her supplemental declaration elaborates her reasoning process in slightly
                                       - 13 -

[*13] greater detail. SSA Schumacher prepared the Form 11369 and the attached

explanation as to why he recommended that no award be made. His supplemental

declaration confirms that he followed CT Counsel’s instructions to ensure that pe-

titioner’s information not be circulated within the IRS. And Ms. Borenstein’s dec-

larations simply attach IDRS records, available to Ms. Applebaum in 2014, con-

firming that the IRS collected no proceeds from Target or the related taxpayers.3

We have routinely considered declarations of this kind on summary judgment,

both in whistleblower cases4 and in other situations where we review IRS action

for abuse of discretion, such as collection due process (CDP) cases.5 Petitioner

has advanced no persuasive reason for departing from this practice here.

      3
        The IDRS records accompanying Ms. Borenstein’s declarations show a
print date of July 2017, when she queried the IDRS system. But the data she thus
retrieved consisted of tax records for 2009 through 2014, which were fully avail-
able to Ms. Applebaum when she issued the June 2014 denial letter. Because Ms.
Applebaum had left the IRS in May 2015, she could not have issued queries to the
IDRS system in November 2016 and July 2017 when respondent filed his motions
for summary judgment.
      4
        See, e.g., Whistleblower 14376-16W v. Commissioner, T.C. Memo. 2017-
181, at *2; Gonzalez v. Commissioner, T.C. Memo. 2017-105, 113 T.C.M. (CCH)
1475, 1476-1477; Perales v. Commissioner, T.C. Memo. 2017-90, 113 T.C.M.
(CCH) 1423, 1424.
      5
      See, e.g., Feldman v. Commissioner, T.C. Memo. 2017-148, at *2; McCree
v. Commissioner, T.C. Memo. 2017-145, at *1-*2; Daniel v. Commissioner, T.C.
Memo. 2017-82, 113 T.C.M. (CCH) 1397, 1397.
                                        - 14 -

[*14] C.     Summary Judgment Standard

      The purpose of summary judgment is to expedite litigation and avoid costly,

time-consuming, and unnecessary trials. Fla. Peach Corp. v. Commissioner, 90

T.C. 678, 681 (1988). The Court may grant summary judgment “upon all or any

part of the legal issues in controversy” when there is no genuine dispute as to any

material fact and a decision may be rendered as a matter of law. Rule 121(a) and

(b); Sundstrand Corp. v. Commissioner, 98 T.C. 518, 520 (1992), aff’d, 17 F.3d

965 (7th Cir. 1994). In deciding whether to grant summary judgment, we construe

factual materials and inferences drawn from them in the light most favorable to the

nonmoving party. Sundstrand Corp., 98 T.C. at 520. The nonmoving party “may

not rest upon the mere allegations or denials” of his pleadings but instead “must

set forth specific facts showing that there is a genuine dispute for trial.” Rule

121(d); see Sundstrand Corp., 98 T.C. at 520.

      As explained more fully below, respondent has shown that there exist no

genuine disputes of material fact as to whether the Secretary abused his discretion

in declining to make an award with respect to the four claims at issue. We accord-

ingly conclude that this case may appropriately be adjudicated summarily.
                                        - 15 -

[*15] D.     Analysis

      Section 7623(a) authorizes the Secretary to pay awards for “detecting under-

payments of tax” or “detecting and bringing to trial and punishment persons guilty

of violating the internal revenue laws or conniving at the same.” Awards under

section 7623(a) are discretionary. However, Congress has provided for nondiscre-

tionary (i.e., mandatory) awards to whistleblowers where the Secretary “proceeds

with any administrative or judicial action described in subsection (a)” and speci-

fied additional requirements are met. Sec. 7623(b)(1).

      Section 7623(b) provides that, “[i]f the Secretary proceeds with any admin-

istrative or judicial action described in subsection (a) based on information

brought to the Secretary’s attention by an individual,” that individual will, subject

to certain conditions, receive an award of 15% to 30% of the proceeds collected.

Sec. 7623(b)(1). The size of the award depends on the extent to which the whis-

tleblower “substantially contributed to such action.” Sec. 7623(b)(1) (last sen-

tence) and (2). To qualify for a nondiscretionary award the whistleblower must

also satisfy a $2 million threshold requirement. Sec. 7623(b)(5)(B).6

      6
        The Bipartisan Budget Act of 2018, Pub. L. No. 115-123, sec. 41108, 132
Stat. at 158-159, amended some of the terminology in section 7623. None of these
amendments, whose effective date is uncertain, has any relevance to the issues we
decide here.
                                        - 16 -

[*16] Under this statutory scheme, a whistleblower cannot qualify for a nondiscre-

tionary award unless two conditions are met. First, the Secretary must “proceed[]

with an[] administrative or judicial action described in subsection (a) based on

information brought to the Secretary’s attention” by the whistleblower. Second,

the Secretary must derive proceeds from this action. Sec. 7623(b)(1); see Cohen

v. Commissioner, 139 T.C. 299, 303 (2012) (“We can provide relief under section

7623(b) only after the Commissioner has initiated an administrative or judicial

action and collected proceeds.”), aff’d, 550 F. App’x 10 (D.C. Cir. 2014); Cooper

v. Commissioner, 136 T.C. 597, 600 (2011) (“[A] whistleblower award is depend-

ent upon both the initiation of an administrative or judicial action and the collec-

tion of tax proceeds.” (Emphasis in original.)).

       While we have jurisdiction to review the IRS’ award determination, we do

not have authority to “review the Commissioner’s determination of the alleged tax

liability to which the claim pertains.” Cohen, 139 T.C. at 302. Nor do we have

authority “to direct the Secretary to proceed with an administrative or judicial ac-

tion.” Cooper, 136 T.C. at 600. If the IRS does not proceed with an administra-

tive or judicial action against the target taxpayer, there by definition can be no

“collected proceeds” and hence no whistleblower award. See id. at 601.
                                       - 17 -

[*17] We conclude that the Office did not abuse its discretion in denying petition-

er’s claims. The administrative record, as properly supplemented,7 shows that the

Secretary did not “proceed[] with any administrative or judicial action” against

Target or the related taxpayers that was “based on information brought to the

Secretary’s attention” by petitioner. See sec. 7623(b)(1). The record reveals that

CID took preliminary steps toward an investigation of Target. Before proceeding

further, however, CID was required to secure approval from CT Counsel to use

petitioner’s information for that purpose.

      After receiving CT Counsel’s opinion that petitioner’s information was cov-

ered by the attorney-client privilege and hence unusable, CID closed its investiga-

tion of Target.8 SSA Schumacher averred that he thereafter put petitioner’s infor-

      7
        A court reviewing agency action may remand a case to enable the agency to
consider material that was not part of the original administrative record. See, e.g.,
Carlton v. Babbitt, 26 F. Supp. 2d 102, 108 (D.D.C. 1998). But a remand would
serve no useful purpose here, because the material the IRS submitted to supple-
ment the record uniformly supports its original decision. If we were to remand
this case, the IRS would surely reach the same conclusion it originally reached,
and the case would return to us with the same record we now have. In other situ-
ations where we review IRS action for abuse of discretion, such as CDP cases, we
routinely decline to order a remand where it would serve no useful purpose. See
Burke v. Commissioner, 124 T.C. 189, 194 n.5 (2005); Kemper v. Commissioner,
T.C. Memo. 2003-195, 86 T.C.M. (CCH) 12, 16.
      8
       Petitioner disputes the conclusion that his information was covered by the
attorney-client privilege. In reviewing the Office’s determination, however, we do
                                                                      (continued...)
                                        - 18 -

[*18] mation into a secure folder and did not provide it “to any other office within

the IRS.” After receiving the Form 11369 from SSA Schumacher, Ms. Apple-

baum similarly concluded that petitioner’s information would not be shared with

any other IRS office. Because CID did not proceed against Target, and because no

other IRS office with investigative authority received petitioner’s information, it

would have been impossible for the Secretary to proceed with any action on the

basis of information petitioner supplied. See sec. 7623(b)(1).9

      In any event, the IDRS transcripts confirm that the IRS commenced no ex-

amination of Target or the related taxpayers for 2009 through 2014, except for one

of the related taxpayers for 2009, and collected no proceeds from them as a result

of investigative action. Petitioner challenges respondent’s reliance on these trans-

cripts, urging that Ms. Applebaum should have dug deeper, reviewing Target’s tax

      8
       (...continued)
not have authority to second-guess the IRS’ decision not to proceed with an ad-
ministrative or judicial action. Our authority is limited to ascertaining whether the
IRS in fact proceeded with such an action and collected proceeds as a result.
Cohen, 139 T.C. at 302; Cooper, 136 T.C. at 600-601.
      9
        Petitioner asserts that the Form 11369, which includes SSA Schumacher’s
explanation as to why CID terminated its preliminary investigation of Target, con-
stitutes “inadmissible hearsay.” It seems clear that this document, if sought to be
introduced into evidence at trial, would be covered by the “business records” ex-
ception to the hearsay rule. See Fed. R. Evid. 803(6)(B). In any event, the Form
11369 is a central component of the administrative record on which our review
must be based. See sec. 301.7623-3(e)(2)(iii), Proced. & Admin. Regs.
                                        - 19 -

[*19] returns or making inquiries of other IRS offices. We have rejected a similar

argument in the CDP context when reviewing IRS action for abuse of discretion,

and we likewise reject it here. We have consistently held in CDP cases that a

settlement officer, absent a demonstrable irregularity in the assessment process,

may rely on account transcripts rather than underlying source documents when

verifying (for example) that taxes have been properly assessed. See, e.g., Davis v.

Commissioner, 115 T.C. 35, 40-41 (2000); Tornichio v. Commissioner, T.C.

Memo. 2002-291, 84 T.C.M. (CCH) 578.

      Petitioner nevertheless hypothesizes that the IRS may have maintained an

action against Target “indirectly,” i.e., through “its involvement with another gov-

ernmental office.” Petitioner asserts his belief that: (1) the U.S. Department of

Justice (DOJ) initiated a prosecution of Target for securities fraud; (2) this pro-

secution resulted in plea agreements resulting in payment of substantial fines for

insider trading in violation of the Federal securities laws; and (3) the DOJ charges

against Target may have included criminal tax counts that were dropped.

      This line of argument is unpersuasive for a variety of reasons. Section

7623(b)(1) authorizes a nondiscretionary award only “if the Secretary proceeds

with an administrative or judicial action.” CID did not proceed with a criminal
                                        - 20 -

[*20] investigation of Target or any of the related taxpayers. Whether CID

officials assisted another governmental unit in an advisory capacity is not a

material fact.

      In any event, petitioner would be entitled to a nondiscretionary award only

if the IRS collected proceeds, and the IDRS records show that it did not. The re-

covery from Target that petitioner hypothesizes was for violation of the Federal

securities laws. Section 7623(b) provides for mandatory awards only if the Secre-

tary collects proceeds resulting from an “administrative or judicial action de-

scribed in subsection (a),” viz., an action for “detecting underpayments of tax” or

“detecting * * * persons guilty of violating the internal revenue laws.” Sec.

7623(a)(1) and (2). Fines for insider trading secured by DOJ do not constitute

“tax proceeds” collected by the Secretary. Cooper, 136 T.C. at 600.10

      10
         We have held that “collected proceeds” under section 7623(b)(1) are not
limited to amounts collected under title 26, but may also include certain criminal
fines and civil forfeitures collected under title 18. See Whistleblower 21276-13W
v. Commissioner, 147 T.C. 121, 139-140 (2016) (holding that “collected pro-
ceeds” include fines and forfeitures resulting from guilty pleas to the filing of false
Federal income tax returns, conspiring to defraud the IRS, and tax evasion). But
in order to constitute “collected proceeds” for purposes of section 7623(b)(1),
criminal fines and forfeitures must be related to “the internal revenue laws.” See
id. at 124, 130-133. That is because the statute authorizes mandatory awards only
where proceeds are collected in actions related to “detecting underpayments of
tax” or “detecting * * * persons guilty of violating the internal revenue laws.”
Sec. 7623(a) (cross-referenced by section 7623(b)(1)).
                                        - 21 -

[*21] Whether the DOJ prosecution of Target included tax charges that were

dropped is not a material fact. While we have jurisdiction to review the IRS’

award determination, we do not have authority to “review the Commissioner’s

determination of the alleged tax liability to which the claim pertains,” Cohen, 139

T.C. at 302, or to “direct the Secretary to proceed with an administrative or judi-

cial action,” Cooper, 136 T.C. at 600. Our authority is limited to determining

whether the IRS in fact collected proceeds; it does not extend to speculating whe-

ther the IRS might have collected proceeds if it had chosen to pursue an examina-

tion or if prosecutorial discretion had been exercised differently.11

       Finally, petitioner faults Ms. Borenstein for limiting her review of IDRS re-

cords to pre-2015 tax years of Target and the related taxpayers. But we are re-

viewing a determination that the Office made in June 2014. The relevant question

is whether the IRS had collected any proceeds from Target or the related taxpayers

as of that date.

       11
        In a similar vein, petitioner speculates that the supposed DOJ prosecution
prompted Target, in subsequent tax years, to recognize, report, and pay tax on in-
come that Target would have otherwise concealed. If this were true, it would be
irrelevant because any tax paid would not represent proceeds of an administrative
or judicial action commenced by the Secretary. See sec. 7623(b)(1); Whistleblow-
er 16158-14W v. Commissioner, 148 T.C. __, __ (slip op. at 13) (Apr. 17, 2017)
(“Collected proceeds do not include self-reported amounts collected when a tax-
payer changes its reporting for years that are not part of the action.”).
                                        - 22 -

[*22] Petitioner replies that the date on which the Office acted on the four claims

at issue--June 27, 2014--“appears to have been selected arbitrarily.” He speculates

that the Office may have chosen this time to act because it believed that proceeds

from Target might be forthcoming and wished to “cut off information at 2014.”

Petitioner has set forth no “specific facts,” see Rule 121(d), to support his conspir-

acy theory, and we will not entertain it. If petitioner believes that the IRS may

have proceeded with an administrative or judicial action against Target and col-

lected proceeds from Target after June 27, 2014, petitioner is free to file with the

Office a new Form 211 advancing that claim.

      To reflect the foregoing,

                                                 An appropriate order and decision

                                        will be entered for respondent.