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[PUBLISH]
In the
United States Court of Appeals
For the Eleventh Circuit
____________________
No. 22-13217
____________________
DAVID E. STONE,
KARI S. CARROLL,
as surviving spouse of Thomas Carroll,
DAVID C. DEPADRO,
Plaintiffs-Appellants,
versus
COMMISSIONER OF INTERNAL REVENUE,
Defendant-Appellee.
____________________
Appeal from the United States District Court
for the Southern District of Florida
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2 Opinion of the Court 22-13217
D.C. Docket No. 9:22-cv-80154-KAM
____________________
Before JORDAN, ROSENBAUM, and HULL, Circuit Judges.
JORDAN, Circuit Judge:
A whistleblower, generally speaking, is a person who goes
public with allegations of mismanagement or wrongdoing in a gov-
ernment agency or a private organization. See The American Her-
itage Dictionary of the English Language 1960–61 (4th ed. 2009);
William Safire, Safire’s New Political Dictionary 872 (1993). Some-
times a whistleblower will act for altruistic reasons, but sometimes
the motivation is financial. This case involves the latter.
The Internal Revenue Code contains a whistleblower provi-
sion which allows persons to report alleged violations of the federal
tax laws and receive up to 30% of any unpaid taxes or penalties
collected by the IRS. See
26 U.S.C. § 7623(b). But what happens if
the IRS, despite crediting the information, decides not to institute
enforcement proceedings against the offending taxpayers because
the effort would be too costly, too burdensome, or too time-con-
suming? Does the whistleblower have any judicial remedy against
the IRS under the Administrative Procedure Act,
5 U.S.C. §
706(2)(A)?
The district court said no, and dismissed the APA complaint
filed by whistleblowers David Stone, Kari Carroll (as the surviving
spouse of Thomas Carroll), and David Depadro for lack of subject-
matter jurisdiction. We conclude that the IRS’ refusal to follow
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22-13217 Opinion of the Court 3
through on the information provided by these whistleblowers was
a decision “committed to agency discretion by law,”
5 U.S.C. §
701(a)(2), and is therefore unreviewable under the APA. We af-
firm. 1
I
We conduct plenary review of the district court’s dismissal
for lack of subject-matter jurisdiction under Federal Rule of Civil
Procedure 12(b)(1). See Houston v. Marod Supermarkets, Inc.,
733 F.3d
1323, 1328 (11th Cir. 2013). When, as here, there is a facial chal-
lenge to subject-matter jurisdiction, we take the factual allegations
in the complaint as true. See McElmurray v. Consol. Gov’t of Augusta-
Richmond Cnty.,
501 F.3d 1244, 1251 (11th Cir. 2007).
An appellee, as the prevailing party in the district court, may
defend the judgment on any ground appearing in the record as long
as it does not seek to enlarge its rights or lessen the rights of the
appellants. See Jennings v. Stephens,
574 U.S. 271, 276 (2015). We
“may affirm the district court’s judgment on any ground that ap-
pears in the record, whether or not that ground was relied upon or
even considered by the district court.” Equal Emp. Opp. Comm’n v.
STME, LLC,
938 F.3d 1305, 1313 (11th Cir. 2019) (quotation and
bracket omitted).
1 For ease, we refer to Mr. Stone, Ms. Carroll, and Mr. Depadro collectively as
the appellants.
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4 Opinion of the Court 22-13217
II
Under the Internal Revenue Code, Real Estate Mortgage
Conduits (“REMICs”) are entities that can avoid income taxation
on investment revenue from their mortgage portfolios if they com-
ply with certain statutory requirements. See 26 U.S.C. §§ 860A et
seq. The REMIC requirements are set forth in 26 U.S.C. § 860D(a),
and one of them is that “substantially all” of the entity’s assets must
“consist of qualified mortgages and permitted investments.” 26
U.S.C. § 860D(a)(4).
A
On March 18, 2011, Mr. Stone and Mr. Carroll (now repre-
sented by his wife, Ms. Carroll) jointly filed whistleblower claims
with the IRS through a Form 211 (an “Application for Award for
Original Information”). They submitted the claims pursuant to
26
U.S.C. § 7623. 2
Mr. Stone and Mr. Carroll alleged that the financial industry,
including over 330 entities identified in their claims, separated
notes from mortgages so that the notes could be sold to investors
without any recorded transfer of the real estate security. Once sep-
arated, the notes and their underlying debt obligations were no
longer secured, thereby removing their status as qualified, tax-ex-
empt REMICs. Because these REMICs did not satisfy the statutory
requirements of § 860D(a)(4), their income—in the hundreds of
2 Due to its length, § 7623 is reproduced in an appendix to our opinion.
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22-13217 Opinion of the Court 5
millions of dollars—was always taxable to their sponsors. And this
income was therefore owed to the United States by those sponsors.
The IRS Whistleblower Office referred the claims to the IRS’
Large Business and International Division (“LB&I”) for audit. Mr.
Stone and Mr. Carroll provided supplemental documentation to
the LB&I Division, including information on the named taxpayer-
bank sponsors of the various REMICs that they claimed failed to
comply with the statutory requirements. LB&I personnel re-
viewed the whistleblower claims and, on August 28, 2012, inter-
nally determined that these claims could have far-reaching implica-
tions beyond the entities identified by Mr. Stone and Mr. Carroll.
Indeed, after reviewing the information provided in the whistle-
blower claims, an IRS auditing employee wrote that the “REMIC
IPG has reviewed the information and determined it has merit,”
and recommended that a sample of the identified taxpayers be ex-
amined.
Ultimately, however, the IRS’ LB&I Division decided not to
take any action on the whistleblower claims and recommended
that the claim for an award be denied on that basis. Internally, the
IRS memorialized its decision in an evaluation report, explaining
that “[t]hough the Government does not dispute the claimants’ al-
legations, to examine the transfer of title for all loans in the trust,
the Government would expend significant resources.” The evalua-
tion report also analyzed other aspects of the whistleblower claims,
including the use of the MERS system by the mortgage securitiza-
tion industry, the alleged harm to the government or the investors
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6 Opinion of the Court 22-13217
of the audited sample entities, and the relevant entities’ possible
compliance with the substance of federal requirements despite im-
perfections in form. Based on this analysis, the IRS decided that it
would take no action, and on October 27, 2015, sent preliminary
denial letters to Mr. Stone and Mr. Carroll. The IRS issued a final
denial on February 1, 2016.
Mr. Stone, Mr. Carroll, and Mr. Depardo filed a parallel joint
whistleblower claim in March of 2012, alleging that a Deutsche
Bank subsidiary had wrongfully claimed REMIC tax-exempt status.
This claim fared no better and, on August 27, 2016, the IRS ren-
dered a final denial on that claim as well.
B
The appellants filed petitions for review of each of these de-
nials, respectively, in the Tax Court. The petitions were filed under
26 U.S.C. § 7623(b)(4).
Regarding the first whistleblower denial, Mr. Stone and Mr.
Carroll jointly requested, among other things, a final determina-
tion, a declaratory decree, and/or injunctive relief from the Tax
Court compelling the IRS to set aside the denial, declaring the de-
nial “arbitrary, capricious, and contrary to law,” compelling the IRS
to enforce the relevant tax laws, and granting “quantum meriut”
fees of $2,727,000.00 for each claimant as compensation for their
whistleblower services. The Tax Court granted the IRS’ motion for
summary judgment, affirming the denial of the claim for an award
and concluding that the prerequisites for an award had not been
met. The Tax Court noted, however, that § 7623(b)—the provision
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22-13217 Opinion of the Court 7
under which the petition was brought—did not confer authority
upon it to review the alleged tax liabilities underlying the claims,
nor did it authorize it to direct the IRS to commence an enforce-
ment action. Mr. Stone and Mr. Carroll did not seek appellate re-
view of the Tax Court’s decision.
Mr. Depadro and Mr. Stone filed a second petition in the Tax
Court related to the Deutsche Bank whistleblower claim. Like its
predecessor, the second petition requested, among other things, a
declaration that the IRS failed to apply and enforce the relevant tax
laws equitably and conducted its “interaction” with Mr. Depadro
and Mr. Stone in an arbitrary and capricious manner; an order set-
ting aside the denial and compelling the IRS to audit their claims; a
finding that there was an “implied contract” with the IRS under
common law; an order compelling the IRS to investigate the sub-
ject taxpayers; and an order awarding “quantum meruit” fees of
$2,727,000.00 each. This petition was ultimately dismissed by the
Tax Court, which affirmed the IRS’ denial of the claim for an
award.
Mr. Depadro and Mr. Stone moved to vacate that order of
dismissal, asserting that the Tax Court failed to consider whether
the IRS had complied with the APA. The Tax Court rejected this
argument, explaining that the APA did not expand its jurisdiction
under § 7623(b) to analyze anything beyond the IRS’ award deter-
mination. The Tax Court explained that the central issue was
“whether the IRS collected proceeds as a result of an administrative
or judicial action using the whistleblower’s information, not
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8 Opinion of the Court 22-13217
whether it could have or should have.” Mr. Depadro and Mr. Stone
did not seek appellate review of the Tax Court’s decision.
C
In January of 2022, the appellants jointly filed a complaint in
the district court seeking review of the IRS’ denial of their whistle-
blower claims under the APA,
5 U.S.C. § 706(2)(A). Specifically, the
appellants brought a single count under the APA for the IRS’ al-
leged “arbitrary and capricious agency action” in denying their
claims. The appellants alleged that their claims “should have been
properly investigated,” that the “REMICs should have been re-
viewed and audited,” and that “the IRS should have conducted ad-
ministrative proceedings on their claims.” The appellants further
alleged that the IRS misunderstood and misapplied the “substance
over form” doctrine, mistakenly believed the whistleblower claims
to be primarily based on fraudulent “robo-signing,” and failed to
meet the standards espoused in the IRS’ own written policy state-
ment. Accordingly, the appellants requested that the district court
rule that the IRS’ final denials were unlawful, set them aside, and
remand their whistleblower claims for review, enforcement and
collection proceedings, and a whistleblower award.
The district court dismissed the complaint without prejudice
for lack of subject-matter jurisdiction, ruling that the appellants had
an adequate remedy in the Tax Court that barred the application
of the APA’s waiver of sovereign immunity pursuant to
5 U.S.C. §
704 (providing for judicial review of a final agency action “for
which there is no other adequate remedy in a court”). Though it
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22-13217 Opinion of the Court 9
concluded that it lacked jurisdiction, the district court alternatively
dismissed the complaint with prejudice on res judicata grounds
based on the Tax Court’s previous two decisions affirming the de-
nials. 3
Following a review of the record and with the benefit of oral
argument, we affirm the district court’s dismissal of the appellants’
complaint without prejudice, albeit for different reasons. Specifi-
cally, we conclude that judicial review is not permitted under the
APA because the IRS’ decisions to not pursue enforcement actions
were “committed to agency discretion by law” within the meaning
of
5 U.S.C. § 701(a)(2).
III
The United States and its agencies are immune from suit un-
less Congress “unequivocally” waives that immunity by statute. See
Lehman v. Nakshian,
453 U.S. 156, 160–62 (1981). “[A]nd the terms
of [the government’s] consent to be sued in any court define that
court’s jurisdiction to entertain the suit.” United States v. Sherwood,
312 U.S. 584, 586 (1941). The Supreme Court has said that “a
waiver of sovereign immunity is to be strictly construed, in terms
of its scope, in favor of the sovereign.” Dep’t of Army v. Blue Fox, Inc.,
525 U.S. 255, 261 (1999).
3 The government, in its motion to dismiss, argued that the IRS’ decision not
to institute enforcement or collection proceedings was “committed to agency
discretion by law,”
5 U.S.C. § 701(a)(2), and as a result, judicial review was not
permitted. The district court did not address this argument, but the govern-
ment presses it on appeal.
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10 Opinion of the Court 22-13217
When applicable, the APA provides a waiver of sovereign
immunity. See Match-E-Be-Nash-She-Wish Band of Pottawatomi Indi-
ans v. Patchak,
567 U.S. 209, 215–16 (2012). The appellants, as the
parties seeking to rely on the APA, must establish that their claim
falls within the APA’s terms. See United States v. White Mountain
Apache Tribe,
537 U.S. 465, 472 (2003).
A
A valid whistleblower claim, by itself, is insufficient to re-
quire a statutory award under
26 U.S.C. § 7623(b). The IRS may
make an award only if it institutes an administrative proceeding or
judicial action and recovers proceeds. See
26 C.F.R. § 301.7623-1(a)
(“The awards provided by [§] 7623 . . . must be paid from collected
proceeds[.]”); 16 Boris Bittker & Lawrence Lokken, Federal Taxa-
tion of Income, Estates and Gifts ¶ 114.6.4 (Nov. 2023) (explaining
that the IRS must proceed with an administrative or judicial action
and recover proceeds). Here, the IRS chose not to institute enforce-
ment actions based on the appellants’ whistleblower claims, and
therefore, never collected any proceeds.
The APA “sets forth the procedures by which federal agen-
cies are accountable to the public and their actions subject to re-
view by the courts.” Franklin v. Massachusetts,
505 U.S. 788, 796
(1992). Under the APA, any person “adversely affected or ag-
grieved” by an agency action, including a “failure to act,” is entitled
to judicial review of such action, as long as the action is a “final
agency action for which there is no other adequate remedy in a
court.” See generally
5 U.S.C. §§ 701–706. Judicial review under the
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22-13217 Opinion of the Court 11
APA is inappropriate, however, when “agency action is committed
to agency discretion by law.”
Id. § 701(a)(2). As relevant here, an
agency’s refusal to institute investigative or enforcement proceed-
ings generally falls within the gamut of § 701(a)(2)’s exception to
judicial review. See Heckler v. Chaney,
470 U.S. 821, 837–38 (1985).
See also Dep’t of Com. v. New York,
139 S. Ct. 2551, 2568 (2019) (“We
have generally limited the [§ 701(a)(2)] exception to certain catego-
ries of administrative decisions that courts traditionally have re-
garded as committed to agency discretion, such as a decision not to
institute enforcement proceedings[.]”) (citations and internal quo-
tation marks omitted).
The Supreme Court has repeatedly recognized “that an
agency’s decision not to prosecute or enforce, whether through
civil or criminal process, is a decision generally committed to an
agency’s absolute discretion.” Heckler,
470 U.S. at 831 (collecting
cases). Agency refusals to enforce or investigate not only fall out-
side of the scope of the APA’s general presumption of review, they
are also presumptively unreviewable. See
id. This is due “in no
small part to the general unsuitability for judicial review” of such
discretionary decisions. See
id.
There are a number of reasons for this unsuitability. See
Dep’t of Homeland Sec. v. Regents of the Univ. of Cal.,
140 S. Ct. 1891,
1906 (2020) (citing Heckler,
470 U.S. at 831). For starters, an agency
decision not to enforce or investigate typically “involves a compli-
cated balancing of a number of factors which are peculiarly within
its expertise,” requiring the agency to determine “not only . . .
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12 Opinion of the Court 22-13217
whether a violation has occurred, but [also] whether agency re-
sources are best spent on this violation or another, whether the
agency is likely to succeed if it acts, whether the particular enforce-
ment action requested best fits the agency’s overall policies, and,
indeed, whether the agency has enough resources to undertake the
action at all.” Heckler,
470 U.S. at 831. In addition, non-enforcement
decisions generally do not involve an agency’s “coercive power
over an individual’s liberty or property rights, and thus do[ ] not
infringe upon areas that courts often are called upon to protect.”
Id. at 832 (emphasis omitted). See also 33 Richard Murphy, et al.,
Federal Practice and Procedure § 8325 (2d ed. 2018 & Apr. 2023
update) (explaining that Heckler relied heavily on past practices and
functional concerns to justify adopting a rule that agency decisions
refusing to initiate enforcement actions are “presumptively unre-
viewable”).
Nevertheless, this presumption against judicial review is just
that—a presumption. It may be rebutted by a showing that “the
substantive statute [at issue] has provided guidelines for the agency
to follow in exercising its enforcement powers.” Heckler, 470 at
832–33. By enacting such a statute, “Congress may limit an
agency’s exercise of enforcement power if it wishes, either by set-
ting substantive priorities, or by otherwise circumscribing an
agency’s power to discriminate among issues or cases it will pur-
sue.” Id. at 833. Congress can indicate its intent to circumscribe
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22-13217 Opinion of the Court 13
enforcement discretion by requiring “meaningful standards for de-
fining the limits of that discretion.” Id. at 834. 4
B
Applying these principles here, we conclude that the IRS’ de-
nials of the appellants’ whistleblower claims—based on a determi-
nation that enforcement actions would expend “significant re-
sources”—were committed to the agency’s discretion by law, and
were therefore presumptively unreviewable. The appellants have
not pointed to anything in § 7623 or any other substantive statute
that rebuts this presumption. As a result, the APA’s waiver of sov-
ereign immunity does not apply, and the district court was correct
in ruling that it lacked subject-matter jurisdiction.
Acknowledging that the IRS “arguably” retains discretion to
choose whether to investigate or bring enforcement actions, the
appellants attempt to re-frame their case as one seeking the “review
and correct[ion] [of] a wrongheaded, irrational blanket policy deci-
sion” by the IRS. In other words, the appellants assert that they are
4 Some have criticized the Supreme Court’s “action/inaction distinction” as
“incoherent and hard to apply.” Eric Biber, The Importance of Resource Allocation
in Administrative Law,
60 Admin. L. Rev. 1, 4 (2008). In at least some circum-
stances, the line is indeed blurry. Compare, e.g., Massachusetts v. EPA,
549 U.S.
497, 527 (2007) (“There are key differences between a denial of a petition for
rulemaking and an agency’s decision not to initiate an enforcement action.”),
with, e.g., Conservancy of Sw. Fla. v. U.S. Fish & Wildlife Serv.,
677 F.3d 1073,
1084 (11th Cir. 2012) (“The decision whether to initiate rulemaking, like the
exercise of enforcement discretion, typically involves a complex balancing of
factors, such as the agency’s priorities and the availability of resources, that
the agency is better equipped than courts to undertake.”).
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14 Opinion of the Court 22-13217
not in fact seeking to force an audit or prosecution of the REMIC
entities. Instead, they say they request only judicial review of the
IRS’ purported blanket denials and the agency’s “arbitrary and ca-
pricious” misapplication of the “substance over form” doctrine dis-
cussed in Gregory v. Helvering,
293 U.S. 465 (1935). We are unper-
suaded by the appellants’ argument.
In their complaint, the appellants expressly sought to force
an investigation or enforcement action by the IRS through declar-
atory or injunctive relief from the district court. See Compl. at 13
(requesting, in their prayer for relief, that the court “[h]old unlaw-
ful and set aside” the IRS’ denials, “[r]emand” the appellants’ claims
“to the IRS for review and appropriate action, including but not
limited to, collection proceedings,” and “[r]equire the IRS to award
[the appellants] any [w]histleblower awards due to them”). The
very basis of the complaint was that the IRS should have properly
investigated the appellants’ whistleblower claims, should have re-
viewed and audited the REMICs, and should have conducted ad-
ministrative proceedings on the whistleblower claims, thus ulti-
mately entitling the appellants to statutory whistleblower awards.
See id. ¶ 26. As the appellants acknowledge, all of these are actions
within the IRS’ discretion. See Appellants’ Br. at 30–31.
Moreover, the appellants’ complaint lacks any allegation
that the IRS’ denials constituted the blanket “general policy” upon
which their appeal now relies—a theory, by the way, not raised in
the appellants’ response to the agency’s motion to dismiss. Though
the Supreme Court has left open the possibility of judicial review
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22-13217 Opinion of the Court 15
for “a situation where it could justifiably be found that the agency
has ‘consciously and expressly adopted a general policy’ that is so
extreme as to amount to an abdication of its statutory responsibili-
ties,” Heckler, 470 U.S at 833 n.4, no such general policy is alleged
here. 5
Indeed, the complaint (and its attached exhibits) indicate
that the IRS reviewed the appellants’ whistleblower claims, con-
ducted the very balancing espoused in Heckler, and, in its discretion,
determined that the investigative, enforcement, and collection ef-
forts were not worth the expenditure of significant resources. See
Compl. ¶ 24, Ex. E. This was a prototypical non-enforcement deci-
sion by a federal agency.
The appellants complain that the IRS’ decision was wrong-
headed and will result in continued violations of the tax laws and a
significant loss of tax revenue. Even if they are possibly right, the
decision is still not one we can review. Almost every agency deci-
sion to not undertake enforcement action will have its detractors,
but the availability of judicial review under the APA does not de-
pend on whether that decision was the correct one.
We are equally unpersuaded that the IRS’ alleged misappli-
cation of the substance-over-form doctrine somehow moves the
5 The Supreme Court “express[ed] no opinion on whether such [general pol-
icy] decisions would be unreviewable under § 701(a)(2).” Heckler,
470 U.S. 833
n.4. Rather, the Court noted that “in those situations the statute conferring
authority on the agency might indicate that such decisions were not ‘commit-
ted to agency discretion.’”
Id.
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16 Opinion of the Court 22-13217
needle. First, even taking the appellants’ allegations as true, the
IRS’ discussion of the substance-over-form issue was just one of nu-
merous factors discussed in the evaluation report, once more indi-
cating that the agency undertook a balancing analysis “peculiarly
within its expertise.” Heckler,
470 U.S. at 830–31. An agency must
consider “whether a violation has occurred,” but though it “is far
better equipped than the courts to deal with the many variables
involved,” it “generally cannot act against each technical violation
of the statute it is charged with enforcing.”
Id. at 831.
Even if the IRS had reviewed the appellants’ whistleblower
claims and conclusively determined that the identified REMICs
were in fact violating the Internal Revenue Code, Heckler under-
scores that the IRS still would not have been required to take enforce-
ment actions against those REMICs based on its discretion to de-
termine the agency’s complex enforcement priorities. This is not
to say that an agency can completely abdicate its statutory obliga-
tions. But the IRS is entrusted by Congress with reviewing allega-
tions of tax violations and determining whether it is in the govern-
ment’s best interest to pursue specific allegations based on a variety
of factors. The IRS did so here.
The appellants have not cited to any specific statute that
somehow limits the IRS’ discretion to act on whistleblower claims.
As a result, there is no “sufficient ‘law to apply’ as to allow judicial
review.” Greenwood Utilities Comm’n v. Hodel,
764 F.2d 1459, 1464
(11th Cir. 1985). See also Heckler,
470 U.S. at 837 (holding that a stat-
ute did not provide meaningful standards because it did not “speak[
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22-13217 Opinion of the Court 17
] to the criteria which shall be used by the agency for investigating
possible violations of the [statute]”). Statutory language that
merely authorizes agency enforcement or sanctions is insufficient.
See
id. at 835 (statutory provisions authorizing the agency to con-
duct investigations and stating that any person who violates the
statute “shall be imprisoned . . . or fined” did not constrain the
agency’s enforcement discretion).
We note, as well, that the IRS regulation which implements
§ 7623 does not provide any standards cabining or limiting the
agency’s exercise of discretion in deciding whether to begin en-
forcement actions based on whistleblower claims. See
26 C.F.R. §
301.7623-1(a)–(f). This confirms our conclusion that § 701(a)(2)’s
exception to judicial review applies. 6
C
In their brief, the appellants suggest that a 2012 internal
memorandum written by Steven T. Miller, IRS Deputy Commis-
sioner for Services and Enforcement, may constitute “meaningful
standards” for defining the limits of the IRS’ discretion with regard
to whistleblower claims. The memorandum, addressed to various
IRS leaders, explained that the IRS Whistleblower Office would be
working with Mr. Miller’s group to establish operating guidelines
and procedures to improve the timeliness and quality of the
agency’s investigative and enforcement decisions. Mr. Miller out-
lined various key principles behind the prospective procedures,
6 The regulation is also reproduced in the appendix.
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18 Opinion of the Court 22-13217
including timeliness and the usefulness of whistleblower debrief-
ing. Notably, though the memorandum does contain expectations
regarding the timeliness of whistleblower determinations, it also
reflects an understanding “that there will be times when these
timelines cannot be met, and exceptions will be necessary to ensure
that the decision on whether to proceed to an audit or investigation
considers all relevant information.” Compl., Ex. N at 2.
Borrowing language from Heckler, we find this purported
policy statement “singularly unhelpful.” Heckler,
470 U.S. at 836.
For one, the memorandum does not reflect any statutory directive
from Congress. Moreover, contrary to the appellants’ assertion, it
does not set out “an entire class of prerequisite procedural steps”
to be undertaken by the IRS. Instead, it outlines general guidelines
and expected timelines for analyzing whistleblower claims. The
memorandum also fails to place any limits or obligations on the
IRS’ discretion to enforce or investigate claims, and indeed, high-
lights the agency’s discretion. Cf.
id. (“Although the statement indi-
cates that the agency considered itself ‘obligated’ to take certain in-
vestigative actions, that language did not arise in the course of dis-
cussing the agency’s discretion to exercise its enforcement power,
but rather in the context of describing agency policy.”). “Whatever
force such a statement might have, and leaving to one side the
problem of whether an agency’s rules might under certain circum-
stances provide courts with adequate guidelines for informed judi-
cial review of decisions not to enforce,” the language in Mr. Miller’s
memorandum cannot “plausibly be read to override the agency’s”
enforcement discretion as outlined above. See
id.
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IV
The IRS’ decisions to not take enforcement actions pursuant
to the appellants’ whistleblower claims are matters “committed to
agency discretion by law” under
5 U.S.C. § 701(a)(2). The appel-
lants have failed to identify any statutory or regulatory constraints
on the IRS’ discretion to decline to investigate alleged tax violations
or to enforce the tax laws. Thus, the APA’s waiver of sovereign
immunity does not apply and the district court was without sub-
ject-matter jurisdiction to review the whistleblowers’ complaint. 7
We affirm the district court’s dismissal of the complaint for
lack of subject-matter jurisdiction but remand for purposes of re-
vising the judgment to reflect that the dismissal is only under §
701(a)(2) and is without prejudice.
AFFIRMED AS TO THE DISMISSAL FOR LACK OF SUBJECT-
MATTER JURISDICTION AND REMANDED FOR PURPOSES OF REVISING
THE JUDGMENT.
7 Given our resolution, we do not address the district court’s § 704 and res
judicata rulings.
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20 Opinion of the Court 22-13217
APPENDIX
26 U.S.C. § 7623. EXPENSES OF DETECTION OF UNDERPAYMENTS AND
FRAUD, ETC.
(a) In general.--The Secretary, under regulations prescribed
by the Secretary, is authorized to pay such sums as he deems nec-
essary for--
(1) detecting underpayments of tax, or
(2) detecting and bringing to trial and punishment persons
guilty of violating the internal revenue laws or conniving at the
same,
in cases where such expenses are not otherwise provided for
by law. Any amount payable under the preceding sentence shall be
paid from the proceeds of amounts collected by reason of the in-
formation provided, and any amount so collected shall be available
for such payments.
(b) Awards to whistleblowers.--
(1) In general.--If the Secretary proceeds with any adminis-
trative or judicial action described in subsection (a) based on infor-
mation brought to the Secretary’s attention by an individual, such
individual shall, subject to paragraph (2), receive as an award at
least 15 percent but not more than 30 percent of the proceeds col-
lected as a result of the action (including any related actions) or
from any settlement in response to such action (determined with-
out regard to whether such proceeds are available to the Secretary).
The determination of the amount of such award by the
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22-13217 Opinion of the Court 21
Whistleblower Office shall depend upon the extent to which the
individual substantially contributed to such action.
(2) Award in case of less substantial contribution.--
(A) In general.--In the event the action described in para-
graph (1) is one which the Whistleblower Office determines to be
based principally on disclosures of specific allegations (other than
information provided by the individual described in paragraph (1))
resulting from a judicial or administrative hearing, from a govern-
mental report, hearing, audit, or investigation, or from the news
media, the Whistleblower Office may award such sums as it con-
siders appropriate, but in no case more than 10 percent of the pro-
ceeds collected as a result of the action (including any related ac-
tions) or from any settlement in response to such action (deter-
mined without regard to whether such proceeds are available to
the Secretary), taking into account the significance of the individ-
ual’s information and the role of such individual and any legal rep-
resentative of such individual in contributing to such action.
(B) Nonapplication of paragraph where individual is orig-
inal source of information.--Subparagraph (A) shall not apply if
the information resulting in the initiation of the action described in
paragraph (1) was originally provided by the individual described
in paragraph (1).
(3) Reduction in or denial of award.--If the Whistleblower
Office determines that the claim for an award under paragraph (1)
or (2) is brought by an individual who planned and initiated the
actions that led to the underpayment of tax or actions described in
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22 Opinion of the Court 22-13217
subsection (a)(2), then the Whistleblower Office may appropriately
reduce such award. If such individual is convicted of criminal con-
duct arising from the role described in the preceding sentence, the
Whistleblower Office shall deny any award.
(4) Appeal of award determination.--Any determination
regarding an award under paragraph (1), (2), or (3) 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).
(5) Application of this subsection.--This subsection shall
apply with respect to any action--
(A) against any taxpayer, but in the case of any individual,
only if such individual’s gross income exceeds $200,000 for any tax-
able year subject to such action, and
(B) if the proceeds in dispute exceed $2,000,000.
(6) Additional rules.--
(A) No contract necessary.--No contract with the Internal
Revenue Service is necessary for any individual to receive an award
under this subsection.
(B) Representation.--Any individual described in paragraph
(1) or (2) may be represented by counsel.
(C) Submission of information.--No award may be made
under this subsection based on information submitted to the Sec-
retary unless such information is submitted under penalty of per-
jury.
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22-13217 Opinion of the Court 23
(c) Proceeds.--For purposes of this section, the term “pro-
ceeds” includes--
(1) penalties, interest, additions to tax, and additional
amounts provided under the internal revenue laws, and
(2) any proceeds arising from laws for which the Internal
Revenue Service is authorized to administer, enforce, or investi-
gate, including--
(A) criminal fines and civil forfeitures, and
(B) violations of reporting requirements.
(d) Civil action to protect against retaliation cases.--
(1) Anti-retaliation whistleblower protection for employ-
ees.--No employer, or any officer, employee, contractor, subcon-
tractor, or agent of such employer, may discharge, demote, sus-
pend, threaten, harass, or in any other manner discriminate against
an employee in the terms and conditions of employment (including
through an act in the ordinary course of such employee’s duties) in
reprisal for any lawful act done by the employee--
(A) to provide information, cause information to be pro-
vided, or otherwise assist in an investigation regarding underpay-
ment of tax or any conduct which the employee reasonably be-
lieves constitutes a violation of the internal revenue laws or any
provision of Federal law relating to tax fraud, when the infor-
mation or assistance is provided to the Internal Revenue Service,
the Secretary of the Treasury, the Treasury Inspector General for
Tax Administration, the Comptroller General of the United States,
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24 Opinion of the Court 22-13217
the Department of Justice, the United States Congress, a person
with supervisory authority over the employee, or any other person
working for the employer who has the authority to investigate, dis-
cover, or terminate misconduct, or
(B) to testify, participate in, or otherwise assist in any admin-
istrative or judicial action taken by the Internal Revenue Service
relating to an alleged underpayment of tax or any violation of the
internal revenue laws or any provision of Federal law relating to
tax fraud.
(2) Enforcement action.--
(A) In general.--A person who alleges discharge or other re-
prisal by any person in violation of paragraph (1) may seek relief
under paragraph (3) by--
(i) filing a complaint with the Secretary of Labor, or
(ii) if the Secretary of Labor has not issued a final decision
within 180 days of the filing of the complaint and there is no show-
ing that such delay is due to the bad faith of the claimant, bringing
an action at law or equity for de novo review in the appropriate
district court of the United States, which shall have jurisdiction
over such an action without regard to the amount in controversy.
(B) Procedure.--
(i) In general.--An action under subparagraph (A)(i) shall be
governed under the rules and procedures set forth in section
42121(b) of title 49, United States Code.
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22-13217 Opinion of the Court 25
(ii) Exception.--Notification made under section
42121(b)(1) of title 49, United States Code, shall be made to the per-
son named in the complaint and to the employer.
(iii) Burdens of proof.--An action brought under subpara-
graph (A)(ii) shall be governed by the legal burdens of proof set
forth in section 42121(b) of title 49, United States Code, except that
in applying such section--
(I) “behavior described in paragraph (1)” shall be substituted
for “behavior described in paragraphs (1) through (4) of subsection
(a)” each place it appears in paragraph (2)(B) thereof, and
(II) “a violation of paragraph (1)” shall be substituted for “a
violation of subsection (a)” each place it appears.
(iv) Statute of limitations.--A complaint under subpara-
graph (A)(i) shall be filed not later than 180 days after the date on
which the violation occurs.
(v) Jury trial.--A party to an action brought under subpara-
graph (A)(ii) shall be entitled to trial by jury.
(3) Remedies.--
(A) In general.--An employee prevailing in any action under
paragraph (2)(A) shall be entitled to all relief necessary to make the
employee whole.
(B) Compensatory damages.--Relief for any action under
subparagraph (A) shall include--
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26 Opinion of the Court 22-13217
(i) reinstatement with the same seniority status that the em-
ployee would have had, but for the reprisal,
(ii) the sum of 200 percent of the amount of back pay and
100 percent of all lost benefits, with interest, and
(iii) compensation for any special damages sustained as a re-
sult of the reprisal, including litigation costs, expert witness fees,
and reasonable attorney fees.
(4) Rights retained by employee.--Nothing in this section
shall be deemed to diminish the rights, privileges, or remedies of
any employee under any Federal or State law, or under any collec-
tive bargaining agreement.
(5) Nonenforceability of certain provisions waiving
rights and remedies or requiring arbitration of disputes.--
(A) Waiver of rights and remedies.--The rights and reme-
dies provided for in this subsection may not be waived by any
agreement, policy form, or condition of employment, including by
a predispute arbitration agreement.
(B) Predispute arbitration agreements.--No predispute ar-
bitration agreement shall be valid or enforceable, if the agreement
requires arbitration of a dispute arising under this subsection.
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22-13217 Opinion of the Court 27
26 C.F.R. § 301.7623-1 GENERAL RULES, SUBMITTING INFORMATION
ON UNDERPAYMENTS OF TAX OR VIOLATIONS OF THE INTERNAL
REVENUE LAWS, AND FILING CLAIMS FOR AWARD.
(a) In general. In cases in which awards are not otherwise
provided for by law, the Whistleblower Office may pay an award
under section 7623(a), in a suitable amount, for information neces-
sary for detecting underpayments of tax or detecting and bringing
to trial and punishment persons guilty of violating the internal rev-
enue laws or conniving at the same. In cases that satisfy the require-
ments of section 7623(b)(5) and (b)(6) and in which the Internal
Revenue Service (IRS) proceeds with an administrative or judicial
action based on information provided by an individual, the Whis-
tleblower Office must determine and pay an award under section
7623(b)(1), (2), or (3). The awards provided for by section 7623 and
this paragraph must be paid from collected proceeds, as defined in
§ 301.7623–2(d).
(b) Eligibility to file claim for award. (1) In general. Any
individual, other than an individual described in paragraph (b)(2) of
this section, is eligible to file a claim for award and to receive an
award under section 7623 and §§ 301.7623–1 through 301.7623–4.
(2) Ineligible whistleblowers. The Whistleblower Office
will reject any claim for award filed by an ineligible whistleblower
and will provide written notice of the rejection to the whistle-
blower. The following individuals are not eligible to file a claim for
award or receive an award under section 7623 and §§ 301.7623–1
through 301.7623–4—
(i) An individual who is an employee of the Department of
Treasury or was an employee of the Department of Treasury when
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28 Opinion of the Court 22-13217
the individual obtained the information on which the claim is
based;
(ii) An individual who obtained the information through the
individual’s official duties as an employee of the Federal Govern-
ment, or who is acting within the scope of those official duties as
an employee of the Federal Government;
(iii) An individual who is or was required by Federal law or
regulation to disclose the information or who is or was precluded
by Federal law or regulation from disclosing the information;
(iv) An individual who obtained or had access to the infor-
mation based on a contract with the Federal Government; or
(v) An individual who filed a claim for award based on infor-
mation obtained from an ineligible whistleblower for the purpose
of avoiding the rejection of the claim that would have resulted if
the claim was filed by the ineligible whistleblower.
(c) Submission of information and claims for award. (1)
Submitting information. To be eligible to receive an award under
section 7623 and §§ 301.7623–1 through 301.7623–4, a whistle-
blower must submit to the IRS specific and credible information
that the whistleblower believes will lead to collected proceeds from
one or more persons whom the whistleblower believes have failed
to comply with the internal revenue laws. In general, a whistle-
blower’s submission should identify the person(s) believed to have
failed to comply with the internal revenue laws and should provide
substantive information, including all available documentation,
that supports the whistleblower’s allegations. Information that
identifies a pass-through entity will be considered to also identify
all persons with a direct or indirect interest in the entity. Infor-
mation that identifies a member of a firm who promoted another
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22-13217 Opinion of the Court 29
identified person’s participation in a transaction described and doc-
umented in the information provided will be considered to also
identify the firm and all other members of the firm. Submissions
that provide speculative information or that do not provide specific
and credible information regarding tax underpayments or viola-
tions of internal revenue laws do not provide a basis for an award.
If documents or supporting evidence are known to the whistle-
blower but are not in the whistleblower’s control, then the whis-
tleblower should describe the documents or supporting evidence
and identify their location to the best of the whistleblower’s ability.
If all available information known to the whistleblower is not pro-
vided to the IRS by the whistleblower, then the whistleblower
bears the risk that this information might not be considered by the
Whistleblower Office for purposes of an award.
(2) Filing claim for award. To claim an award under section
7623 and §§ 301.7623–1 through 301.7623–4 for information pro-
vided to the IRS, a whistleblower must file a formal claim for award
by completing and sending Form 211, “Application for Award for
Original Information,” to the Internal Revenue Service, Whistle-
blower Office, at the address provided on the form, or by comply-
ing with other claim filing procedures as may be prescribed by the
IRS in other published guidance. The Form 211 should be com-
pleted in its entirety and should include the following infor-
mation—
(i) The date of the claim;
(ii) The whistleblower’s name;
(iii) The whistleblower’s address and telephone number;
(iv) The whistleblower’s date of birth;
(v) The whistleblower’s taxpayer identification number; and
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30 Opinion of the Court 22-13217
(vi) An explanation of how the information on which the
claim is based came to the attention and into the possession of the
whistleblower, including, as available, the date(s) on which the
whistleblower acquired the information and a complete descrip-
tion of the whistleblower’s present or former relationship (if any)
to person(s) identified on the Form 211.
(3) Under penalty of perjury. No award may be made un-
der section 7623(b) unless the information on which the award is
based is submitted to the IRS under penalty of perjury. All claims
for award under section 7623 and §§ 301.7623–1 through 301.7623–
4 must be accompanied by an original signed declaration under
penalty of perjury, as follows: “I declare under penalty of perjury
that I have examined this application, my accompanying state-
ment, and supporting documentation and aver that such applica-
tion is true, correct, and complete, to the best of my knowledge.”
This requirement precludes the filing of a claim for award by a per-
son serving as a representative of, or in any way on behalf of, an-
other individual. Claims filed by more than one whistleblower
(joint claims) must be signed by each individual whistleblower un-
der penalty of perjury.
(4) Perfecting claim for award. If a whistleblower files a
claim for award that does not include information described under
paragraph (c)(2) of this section, does not contain specific and cred-
ible information as described in paragraph (c)(1) of this section, or
is based on information that was not submitted under penalty of
perjury as required by paragraph (c)(3) of this section, the Whistle-
blower Office may reject the claim or notify the whistleblower of
the deficiencies and provide the whistleblower an opportunity to
perfect the claim for award. If a whistleblower does not perfect the
claim for award within the time period specified by the
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22-13217 Opinion of the Court 31
Whistleblower Office, then the Whistleblower Office may reject
the claim. If the Whistleblower Office rejects a claim, then the
Whistleblower Office will provide notice of the rejection to the
whistleblower pursuant to the rules of § 301.7623–3(b)(3) or (c)(7).
If the Whistleblower Office rejects a claim for the reasons described
in this paragraph, then the whistleblower may perfect and resubmit
the claim.
(d) Request for assistance. (1) In general. The Whistle-
blower Office, the IRS, or IRS Office of Chief Counsel may request
the assistance of a whistleblower or the whistleblower’s legal rep-
resentative. Any assistance shall be at the direction and control of
the Whistleblower Office, the IRS, or the IRS Office of Chief Coun-
sel assigned to the matter. See § 301.6103(n)–2 for rules regarding
written contracts among the IRS, whistleblowers, and legal repre-
sentatives of whistleblowers.
(2) No agency relationship. Submitting information, filing
a claim for award, or responding to a request for assistance does
not create an agency relationship between a whistleblower and the
Federal Government, nor does a whistleblower or the whistle-
blower’s legal representative act in any way on behalf of the Fed-
eral Government.
(e) Confidentiality of whistleblowers. Under the inform-
ant’s privilege, the IRS will use its best efforts to protect the identity
of whistleblowers. In some circumstances, the IRS may need to re-
veal a whistleblower’s identity, for example, when it is determined
that it is in the best interests of the Government to use a whistle-
blower as a witness in a judicial proceeding. In those circum-
stances, the IRS will make every effort to notify the whistleblower
before revealing the whistleblower’s identity.
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32 Opinion of the Court 22-13217
(f) Effective/applicability date. This rule is effective on Au-
gust 12, 2014. This rule applies to information submitted on or after
August 12, 2014, and to claims for award under sections 7623(a) and
7623(b) that are open as of August 12, 2014.
