                                               RAYMOND COHEN, PETITIONER v. COMMISSIONER                                   OF
                                                     INTERNAL REVENUE, RESPONDENT
                                                    Docket No. 26925–11W.                      Filed October 9, 2012.

                                                 R denied P’s whistleblower award claim under I.R.C. sec.
                                               7623(b). P concedes that information he provided R has not
                                               led to R instituting an action or collecting proceeds. P filed a
                                               petition requesting that we order R to reopen his award claim.
                                               R moved to dismiss for failure to state a claim. Held: I.R.C.
                                               sec. 7623(b) does not authorize P’s requested relief. Held, fur-
                                               ther, P did not state a claim upon which relief can be granted.

                                           Raymond Cohen, pro se.
                                           Jonathan D. Tepper, for respondent.

                                                                                  OPINION

                                        KROUPA, Judge: This case is before the Court on respond-
                                     ent’s motion to dismiss for failure to state a claim under Rule
                                     401 and petitioner’s motion for summary judgment under
                                     Rule 121. This case stems from a whistleblower claim under
                                     section 7623(b). Petitioner challenges respondent’s decision
                                     not to pursue whistleblower information he provided. Peti-
                                     tioner alleges respondent denied his claim for an award with-
                                     out instituting an administrative or judicial action or col-
                                       1 All Rule references are to the Tax Court Rules of Practice and Procedure, and all section

                                     references are to the Internal Revenue Code, unless otherwise indicated.


                                                                                                                                 299




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                                     lecting any proceeds. We must decide whether we may order
                                     respondent to reopen petitioner’s whistleblower claim under
                                     section 7623(b). We hold that no relief is available. We shall
                                     dismiss the petition and deny as moot petitioner’s motion for
                                     summary judgment.

                                                                               Background
                                       We summarize the factual background and procedural his-
                                     tory to rule on the instant motions. Petitioner’s allegations
                                     are assumed solely for the purpose of deciding the motions. 2
                                     Petitioner resided in New Jersey when he filed the petition.
                                     Petitioner acts pro se in this matter.
                                       Petitioner is a certified public accountant. Petitioner pro-
                                     vided respondent whistleblower information that petitioner
                                     believed to be actionable.
                                       Specifically, petitioner learned of alleged tax law violations
                                     when his wife served as an executrix for an estate. The
                                     estate held uncashed stock dividend checks issued by a
                                     public corporation (taxpayer). 3 Petitioner’s wife requested
                                     the taxpayer honor those checks and pay all unpaid divi-
                                     dends. The taxpayer would not release dividends without
                                     petitioner’s wife presenting an original check issued within
                                     the last 10 years.
                                       Petitioner suspected that the taxpayer customarily
                                     retained possession of unclaimed proceeds resulting from
                                     uncashed dividend checks and unredeemed bonds (unclaimed
                                     assets). In 2009 petitioner requested information from the
                                     State comptroller under that State’s Freedom of Information
                                     Law (FOIL). The comptroller provided petitioner the amount
                                     of uncashed dividends that the taxpayer had reported for cer-
                                     tain stocks. The taxpayer had not reported any uncashed
                                     dividends for those stocks from 2005 to 2008.
                                       Petitioner also reviewed allegations in pleadings from a
                                     civil proceeding against the taxpayer. See generally Frankel
                                     v. Cole, No. 06–cv–439, 2007 WL 2683673 (E.D.N.Y. Sept. 7,
                                     2007). Petitioner asserts that the allegations in that civil
                                       2 We note that petitioner advanced factual allegations in the petition, the amended petition,

                                     and the pleadings associated with the instant motions. We construe all allegations in the light
                                     most favorable to petitioner. See, e.g., Ballantine v. Commissioner, 74 T.C. 516, 522–523 (1980).
                                       3 We refrain from using information identifying the alleged taxpayer to whom the claim re-

                                     lates. See Rule 345(b).




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                                     (299)                           COHEN v. COMMISSIONER                                       301


                                     case corroborate his allegation that the taxpayer possesses
                                     unclaimed assets worth more than $700 million.
                                       Petitioner alleged that the taxpayer was obligated by law
                                     to turn over the unclaimed assets to the State. Petitioner fur-
                                     ther alleged that the unclaimed assets the taxpayer retained
                                     constituted unreported income for Federal tax purposes.
                                       Petitioner submitted his allegations to respondent on Form
                                     211, Application for Award for Original Information (claim).
                                     Respondent notified petitioner that the matter had been
                                     assigned to his Whistleblower Office in Ogden, Utah. The
                                     Whistleblower Office evaluated the claim to determine
                                     whether an investigation was warranted and an award was
                                     appropriate. A few weeks later the Whistleblower Office
                                     informed petitioner he was not eligible for an award because
                                     no proceeds were collected. Petitioner requested the Whistle-
                                     blower Office to reconsider the claim. The Whistleblower
                                     Office reiterated the denial, noting that the claim was based
                                     on publicly available information.
                                       Petitioner filed a petition and an amended petition in this
                                     Court. Petitioner requests that the Court order respondent to
                                     reopen the claim. Respondent moved to dismiss for failure to
                                     state a claim upon which relief can be granted. Petitioner
                                     opposed the motion and filed a motion for summary judg-
                                     ment.

                                                                                Discussion
                                        This case presents an issue of first impression in this
                                     Court. We are asked to decide whether any relief is available
                                     under section 7623(b) when a taxpayer alleges that the
                                     Commissioner denied a claim without initiating an adminis-
                                     trative or judicial action or collecting proceeds. Petitioner
                                     contends that respondent abused his discretion by not acting
                                     on his information. Petitioner argues respondent must
                                     explain the reason he denied the claim and reopen the claim.
                                     Respondent contends we can provide relief under section
                                     7623(b) only after the Commissioner initiates an administra-
                                     tive or judicial action and collects proceeds.
                                     I. Standard of Review
                                      We begin with the standard of review for a motion to dis-
                                     miss for failure to state a claim. A petition should be simple,




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                                     concise and direct. Rule 31(b). A whistleblower petition must
                                     provide the basis on which the taxpayer disagrees with the
                                     determination, supporting facts and a prayer setting forth
                                     the relief sought. Rule 341(b)(3)–(5). We construe all
                                     pleadings to do substantial justice. Rule 31(d). We may dis-
                                     miss a petition for failure to state a claim upon which relief
                                     can be granted. Rule 40. Dismissal for failure to state a claim
                                     is appropriate where, even if all of the allegations contained
                                     in a pleading are true, a claim fails as a matter of law. See
                                     Phillips v. County of Allegheny, 515 F.3d 224, 233 (3d Cir.
                                     2008).
                                     II. Whistleblower Award Determination Review
                                        We now consider the relief available under section 7623.
                                     We may exercise our jurisdiction only to the extent author-
                                     ized by Congress. Kasper v. Commissioner, 137 T.C. 37, 40
                                     (2011). In a whistleblower action, we have jurisdiction only
                                     with respect to the Commissioner’s award determination.
                                     Sec. 7623; Cooper v. Commissioner, 135 T.C. 70, 75–76 (2010)
                                     (Cooper I).
                                        Generally, an individual who provides information that
                                     leads the Commissioner to proceed with an administrative or
                                     judicial action shall receive an award equal to a percentage
                                     of the collected proceeds. See sec. 7623(b)(1). A whistleblower
                                     award depends upon the Commissioner commencing an
                                     administrative or judicial action and collecting proceeds. See
                                     Whistleblower 14106–10W v. Commissioner, 137 T.C. 183,
                                     189 (2011). Our jurisdiction under section 7623(b) does not
                                     contemplate that we review the Commissioner’s determina-
                                     tions of the alleged tax liability to which the claim pertains.
                                     See Cooper v. Commissioner, 136 T.C. 597, 600 (2011)
                                     (Cooper II). Nor does section 7623 confer authority to direct
                                     the Commissioner to commence an administrative or judicial
                                     action. Id.
                                        Respondent contends we should dismiss the petition
                                     because petitioner has not alleged any claim for relief avail-
                                     able under section 7623(b). We agree. We are mindful that
                                     we should construe the petition so as to do justice. Petitioner
                                     disagrees with respondent’s decision not to act on his
                                     information. Petitioner acknowledges, however, that the
                                     claim did not lead to the Commissioner commencing an




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                                     (299)                           COHEN v. COMMISSIONER                                         303


                                     action against, or collecting any proceeds from, the taxpayer.
                                     Petitioner has not alleged that he met the requirements to
                                     be eligible for any relief under section 7623(b).
                                     III. Petitioner’s Arguments
                                       We now address petitioner’s arguments that he should
                                     nevertheless be granted relief. Petitioner is concerned that
                                     respondent will collect proceeds from the taxpayer after
                                     denying the claim. He would therefore be precluded from an
                                     award despite providing actionable information.
                                       First, petitioner argues that he is entitled to relief because
                                     respondent did not comply with the Administrative Proce-
                                     dure Act (APA). See 5 U.S.C. secs. 551–559, 701–706 (2006).
                                     The APA, however, does not create a right of action or expand
                                     our jurisdiction. See Anonymous v. Commissioner, 134 T.C.
                                     13, 19 (2010). We can provide relief under section 7623(b)
                                     only after the Commissioner has initiated an administrative
                                     or judicial action and collected proceeds. Petitioner has not
                                     alleged the section 7623(b) threshold requirements have been
                                     met. 4
                                       Second, petitioner contends that he is entitled to a legal
                                     and factual explanation of respondent’s denial of the claim.
                                     See Cooper v. Commissioner, 136 T.C. at 601. In Cooper II,
                                     we noted that the Commissioner had produced through the
                                     course of litigation a memorandum explaining why the
                                     whistleblower claim had been denied. Id. We did not hold
                                     that the Commissioner was obligated under section 7623 to
                                     detail his legal and factual reasons for not pursuing a claim.
                                     There is no relief available before the prerequisites of section
                                     7623(b) are satisfied.
                                       Third, he argues that he is entitled to relief on equitable
                                     grounds. This Court, however, is not a court of equity and
                                     section 7623 does not provide for equitable relief. See
                                       4 Petitioner contends the respondent’s decision was arbitrary and capricious. See 5 U.S.C. sec.

                                     706(2)(A) (2006). Petitioner argues that respondent’s stated reason for denying the claim was
                                     inconsistent with his procedures. The Commissioner will not process an award claim if the infor-
                                     mation provided did not identify a Federal tax issue upon which the Commissioner took action,
                                     result in the detection of an underpayment of tax or result in the collection of proceeds. Internal
                                     Revenue Manual pt. 25.2.2.5(2) (June 18, 2010). The Whistleblower Office stated in the first de-
                                     nial letter that the information did not lead to the collection of proceeds. Respondent may refuse
                                     to process an award claim for this reason. See id. Petitioner also contends respondent incorrectly
                                     concluded that petitioner relied on publicly available information. Petitioner alleges, however,
                                     that he relied on pleadings from a civil proceeding and information provided through a FOIL
                                     request. Both sources are public information.




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                                     Commissioner v. McCoy, 484 U.S. 3, 7 (1987); Stovall v.
                                     Commissioner, 101 T.C. 140, 149–150 (1993). Section 7623(b)
                                     does not provide any relief before whistleblower information
                                     leads to an administrative or judicial action and the collec-
                                     tion of proceeds.
                                     IV. Conclusion
                                        In toto, section 7623(b)(4) authorizes our review of any
                                     award determination. Petitioner seeks relief that is unavail-
                                     able because respondent never instituted an action or col-
                                     lected any proceeds. We can appreciate petitioner’s frustra-
                                     tion that information that he believes is actionable was not
                                     pursued. Congress, however, has charged the Commissioner
                                     with resolving these claims and has not provided any rem-
                                     edies until after an administrative or judicial action and the
                                     collection of proceeds. For that reason, we will grant respond-
                                     ent’s motion to dismiss for failure to state a claim. We will
                                     also deny as moot petitioner’s motion for summary judgment.
                                        To reflect the foregoing,
                                                                    An appropriate order and order of dis-
                                                                   missal will be entered.

                                                                               f




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