Whistleblower 769-16W ( 2022 )

United States Tax Court
159 T.C. No. 2WHISTLEBLOWER 769-16W,
Petitioner
v.
COMMISSIONER OF INTERNAL REVENUE,
Respondent
—————
Docket No. 769-16W. Filed August 4, 2022.
—————
Before the Court in this whistleblower case is a Joint
Motion to Remand asking the Court to enter an order and
decision vacating the prior determinations of the
Whistleblower Office (WBO) and remanding P’s claims to
the WBO for further consideration without retaining
jurisdiction.
Held: The Court has discretion to remand P’s claims
to the WBO for further consideration without retaining
jurisdiction.
Held, further, exercising its discretion, the Court
will grant the parties’ Joint Motion.
—————
Jason D. Wright, T. Barry Kingham, and Kaitlyn T. Devenyns, for
petitioner.
Jadie T. Woods and Eric R. Skinner, for respondent.
Served 08/04/22
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OPINION
TORO, Judge: This whistleblower case is before the Court on the
parties’ Joint Motion to Remand. For the reasons set out below, we will
grant the Motion.
Background 1
This case, which began in 2016, has previously required the Court
to confront novel issues concerning the application of section 7623(b). 2
For example, in a 2019 reviewed opinion, the Court considered whether
we could appropriately remand a whistleblower case to the
Whistleblower Office for further consideration at the Commissioner’s
request and over Petitioner’s objection. Whistleblower 769-16W, 152
T.C. at 172–73. The Court concluded that we could and remanded the
case to the Whistleblower Office while retaining jurisdiction. Id. at 182.
The remand did not resolve the relevant issues to Petitioner’s
satisfaction, and the parties returned seeking additional review.
Following informal conferences with the Court and additional pretrial
proceedings, however, the parties narrowed their dispute 3 and now
jointly move for another remand, among other things, to permit the
Whistleblower Office to “evaluate the contribution of the whistleblower’s
information (which comprises [a congressional committee report]), if
any, to any ongoing IRS action against” certain targets. Joint Mot. to
Remand ¶ 29. If that were all, we could grant their request by order,
relying on our 2019 opinion.
But the Motion now before us adds a wrinkle: It asks us to remand
without retaining jurisdiction. As the parties put it, “[t]he pending IRS
actions against the target taxpayers are not interdependent, and the
1 For additional background, see Whistleblower 769-16W v. Commissioner, 152
T.C. 172, 172–75 (2019).
2 Unless otherwise indicated, all statutory references are to the Internal
Revenue Code, Title 26 U.S.C., in effect at all relevant times. For an overview of
section 7623, see Rogers v. Commissioner, 157 T.C. 20, 21, 26–31 (2021).
3 For example, on May 23, 2022, the parties jointly moved to dismiss part of
the case “on the grounds that petitioner is no longer seeking this Court’s review of the
Whistleblower Office’s denial of their whistleblower claims with respect to certain
taxpayers addressed in respondent’s Whistleblower Office’s determination dated
December 9, 2015, and supplemental determination dated November 15, 2019,” Joint
Mot. to Dismiss 1, and the Commissioner moved to withdraw his Motion for Summary
Judgment filed on July 10, 2020. The Court will separately grant both Motions.
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actions may become final at different times and involve different levels
of contribution from the Petitioner’s information, if it is considered.” Id.
¶ 30. Therefore, “it may be appropriate for the Whistleblower Office
upon remand to issue a separate determination relating to each [target]
taxpayer.” Id. In addition, “[t]he timeline for the resolution of any IRS
actions against the [target] taxpayers cannot be known at present, nor
is that timing under the control of the Whistleblower Office.” Id. ¶ 33.
And “[t]he Whistleblower Office must wait until the outcome of the IRS
actions before the Whistleblower Office can evaluate the contribution, if
any, of the Petitioner’s information, and cannot make any determination
until there is a final determination of tax.” Id. The parties, therefore,
“request that the Court enter an order and decision vacating the prior
determinations of the Whistleblower Office and remanding the claims to
the Whistleblower Office without retaining jurisdiction.” Id. ¶ 34
(emphasis added).
The novel question before us now is whether we may do so. As we
explain below, we conclude that we may.
Discussion
In Jacobson v. Commissioner, 148 T.C. 68, 68 (2017), we
considered whether a whistleblower could voluntarily have her case
dismissed when the Commissioner did not object to the dismissal.
Reasoning by analogy to other types of cases in which we have granted
taxpayers’ requests for voluntary dismissal, we concluded that we had
discretion to permit whistleblowers to move the Court to dismiss their
own cases as well. Id. at 69–71.
Although the parties here do not seek a dismissal, the relief they
request presents similar considerations. The parties ask us to vacate
the Whistleblower Office’s previous determinations and remand the case
to that office to permit it to evaluate Petitioner’s claims in a manner
consistent with the Joint Motion to Remand. But, rather than retaining
jurisdiction as we did during our prior remand in this case, we would
permit the Whistleblower Office to proceed without our further
involvement. And any new determinations made by the Whistleblower
Office would be reviewed in this Court in due course if Petitioner decides
to appeal them. See I.R.C. § 7623(b)(4).
Nothing in section 7623(b) precludes us from proceeding as the
parties request, and we see no other reason for declining their invitation
in the circumstances here. In cases like this one, our Court acts like an
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appellate court reviewing the record developed by the Whistleblower
Office. See, e.g., Am. Bioscience, Inc. v. Thompson, 269 F.3d 1077, 1083
(D.C. Cir. 2001) (“As we have repeatedly recognized, . . . when a party
seeks review of agency action under the [Administrative Procedure Act
(APA)], the district judge sits as an appellate tribunal.”); Van Bemmelen
v. Commissioner, 155 T.C. 64, 78–79 (2020) (describing our Court’s role
in reviewing the administrative record in a whistleblower case);
Whistleblower 769-16W, 152 T.C. at 177–78 (discussing Kasper v.
Commissioner, 150 T.C. 8, 20 (2018), and the default rules for judicial
review under the APA). When a court of appeals remands a case to a
district court or an administrative agency, ordinarily it does not retain
jurisdiction over the case. See, e.g., NLRB v. Deena Artware, Inc., 251
F.2d 183, 186 (6th Cir. 1958) (“Certainly, it is not customary for an
appellate court to retain jurisdiction of a cause which it has decided in
order to be assured that its judgment or decree will be subsequently
carried out by the parties.”); 16 Charles Alan Wright & Arthur R. Miller,
Federal Practice and Procedure § 3937.1 (Westlaw 2022), FPP (collecting
and discussing authorities). Rather,
[t]he norm is to vacate agency action that is held to be
arbitrary and capricious and remand for further
proceedings consistent with the judicial decision, without
retaining oversight over the remand proceedings. See, e.g.,
Burlington Resources, Inc. v. FERC, 513 F.3d 242, 251
(D.C. Cir. 2008) (vacating and remanding agency action a
second time for further adjudication without retaining
jurisdiction); North Carolina v. EPA, 531 F.3d 896, 929–30
(D.C. Cir. 2008) (vacating agency rule as “fundamentally
flawed” and remanding for further proceedings without
retaining jurisdiction); Wedgewood Village Pharm. v. DEA,
509 F.3d 541, 553 (D.C. Cir. 2007) (vacating agency order
and remanding for further adjudication proceedings
without retaining jurisdiction); Environmental Defense
Fund v. EPA, 898 F.2d 183, 190 (D.C. Cir. 1990) (vacating
agency rule and remanding for further action without
retaining jurisdiction, and declining petitioner’s request to
impose two-year deadline even though original statutory
deadline for action at issue was two years).
Baystate Med. Ctr. v. Leavitt, 587 F. Supp. 2d 37, 41 (D.D.C. 2008).
We recognize, of course, that courts have “the discretion to retain
jurisdiction over a case pending completion of a remand and to order the
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filing of progress reports.” Id. (citing Cobell v. Norton, 240 F.3d 1081,
1109 (D.C. Cir. 2001)). And they may well do so “to facilitate immediate
review of further proceedings before the . . . agency being reviewed
without the formalities of a new appeal.” Wright & Miller, supra.
Courts may also retain jurisdiction in “cases alleging unreasonable
delay of agency action or failure to comply with a statutory deadline, or
for cases involving a history of agency noncompliance with court orders
or resistance to fulfillment of legal duties.” Baystate Med. Ctr., 587 F.
Supp. 2d at 41 (citing Cobell, 240 F.3d at 1109 (collecting authorities)).
The circumstances here, however, do not support retaining
jurisdiction. When we previously remanded this case, we properly
retained jurisdiction. See Whistleblower 769-16W, 152 T.C. at 182.
Doing so permitted the Whistleblower Office to supplement what the
Commissioner conceded was an incomplete record, investigate specific
questions, and provide a supplemental determination promptly. Id.
at 175, 182. Retaining jurisdiction facilitated our immediate review
without requiring an unnecessary filing of a new appeal. See Wright &
Miller, supra. Indeed, retaining jurisdiction would ordinarily be
advisable in whistleblower cases that raise similar record issues that
may be resolved through expeditious remand proceedings. But, given
the current posture of this case, when the parties jointly seek vacatur
and advise us that “[t]he timeline for the resolution of any IRS actions
against the [target] taxpayers cannot be known at present, nor is that
timing under the control of the Whistleblower Office,” Joint Mot. to
Remand ¶ 33, and when the concerns summarized in Baystate Medical
Center are not present, retaining jurisdiction does not appear to aid an
efficient resolution.
Finally, proceedings under section 7623 differ from those under
section 6330, which governs hearings concerning proposed levies.
Section 6330(b)(2) contemplates that “[a] person shall be entitled to only
one hearing under this section with respect to the taxable period to
which the unpaid tax . . . relates.” That statutory text counsels in favor
of our retaining jurisdiction with respect to any remand for a
supplemental hearing in cases under section 6330. Doing so permits us
to review the entire hearing (as supplemented) once the remand is
complete and avoids any disputes about compliance with the
section 6330(b)(2) restriction as well as any potential prejudice to a
taxpayer seeking our review. By contrast, nothing in section 7623(b)
contemplates that a whistleblower is limited to one proceeding before
the Whistleblower Office. Thus, our declining to retain jurisdiction
during a remand here, at the request of the parties and after vacating
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the Whistleblower Office’s prior determinations, neither departs from
the statute nor prejudices a whistleblower in Petitioner’s circumstances.
In view of the foregoing, as in Jacobson, in the exercise of our
discretion, we will grant the parties’ Motion to vacate so much of the
Whistleblower Office’s determination, as supplemented, as will remain
pending before the Court after the Court grants the parties’ Joint Motion
for partial dismissal, see note 3 above, and remand the case without
retaining jurisdiction over the remand proceedings.
To reflect the foregoing,
An appropriate order and decision will be entered.