                               T.C. Memo. 2014-157



                         UNITED STATES TAX COURT



               WHISTLEBLOWER 22231-12W, Petitioner v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent



      Docket No. 22231-12W.                         Filed August 4, 2014.



      Robert F. Katzberg, for petitioner.

      Charles J. Butler, for respondent.



            MEMORANDUM FINDINGS OF FACT AND OPINION


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

motion by the Internal Revenue Service (IRS or respondent) to dismiss for lack of

jurisdiction. Petitioner received several emails from the IRS Whistleblower Office

(Office) that petitioner asserts constitute a determination regarding one of his
                                         -2-

[*2] claims.1 The issue we must decide is whether the IRS made a “determination

regarding an award” within the meaning of section 7623(b)(4) sufficient to confer

jurisdiction on this Court.2

                                FINDINGS OF FACT

      These findings of fact are based on the parties’ pleadings, a stipulation of

facts with accompanying exhibits, and an evidentiary hearing. At the hearing the

Court received testimony from Stephen Whitlock, Director of the Office. He test-

ified about the Office’s procedures for processing claims generally and about its

handling of the particular claim at issue here. We found his testimony instructive

and credible in all respects.

      Petitioner filed Form 211, Application for Award for Original Information,

with the Office in November 2010. On the application petitioner asserted that he

was cooperating with the Department of Justice and the IRS Criminal Investiga-



      1
        The Court granted petitioner’s motion to proceed anonymously in this case.
In an effort to preserve petitioner’s anonymity, the parties in their briefs and other
filings refer to the U.S. taxpayer who is the subject of the relevant whistleblower
claim as “Taxpayer 1.” We will employ the same convention in this opinion.
When referring to Taxpayer 1 and to petitioner, we will employ the masculine pro-
noun and possessive adjective without intending to create any implication con-
cerning the gender of either person.
      2
       All statutory references are to the Internal Revenue Code in effect at the
relevant times. All dollar amounts are rounded to the nearest dollar.
                                         -3-

[*3] tion Division in connection with the ongoing investigation of two Swiss

bankers. Petitioner alleged that his cooperation with those agencies had led to,

and would lead to more, information about these bankers’ involvement in tax

evasion by U.S. persons having undeclared offshore financial accounts.

      On December 1, 2010, the Office notified petitioner that it had received the

Form 211 and assigned unique claim numbers to his claims regarding the two

Swiss bankers.3 The Office advised petitioner that if it initiated an investigation as

a result of the information, final resolution of his claims could take several years.

No award could be paid until the IRS had collected any taxes or other amounts

assessed by virtue of the information petitioner had supplied.

      Subsequent communications (letters, emails, and phone calls) ensued be-

tween Cindy Stuart, the Office analyst assigned to petitioner’s claims, and peti-

tioner’s counsel. Petitioner’s counsel tried to convince Ms. Stuart and the Office

that petitioner’s cooperation was the linchpin in the prosecution of the two Swiss

bankers, which allegedly led to the Government’s receiving incriminating infor-

mation about numerous U.S. taxpayers.




      3
        The Office subsequently informed petitioner that “the claim number
assignment is strictly for control purposes * * * and no inference should be drawn
of the applicability of any award payment.”
                                         -4-

[*4] On August 23, 2011, petitioner filed with the Office a third claim for an

award, which is the subject of the present controversy. Petitioner filed this claim

after learning that Taxpayer 1 had agreed to pay a substantial penalty in conjunc-

tion with a guilty plea for filing a false tax return. Taxpayer 1 admitted that one of

the Swiss bankers had helped him open Swiss bank accounts to conceal his in-

come and assets from U.S. authorities. By the guilty plea, Taxpayer 1 agreed to

pay a multimillion-dollar civil penalty for failing to file Form TD F 90-22.1, Re-

port of Foreign Bank and Financial Accounts (FBAR). See 31 U.S.C. sec. 5321(a)

(2006). Taxpayer 1 also agreed to pay the IRS a relatively small amount of

restitution, reflecting unpaid Federal income tax due on income earned from the

Swiss bank accounts. Petitioner claimed entitlement to an award based upon the

aggregate amount paid by Taxpayer 1, given petitioner’s alleged involvement in

the Swiss banker’s arrest, which led to Taxpayer 1’s arrest. On January 11, 2012,

the Office assigned this claim a unique claim number ending in 67 (Taxpayer 1

claim).

      On January 26, 2012, petitioner’s counsel sent Ms. Stuart a detailed memo-

randum outlining petitioner’s asserted connection with Taxpayer 1 and urging that

an award for the Taxpayer 1 claim be finalized without delay. On January 31 Ms.

Stuart mailed petitioner’s counsel a letter confirming receipt of the January 26
                                        -5-

[*5] letter. She informed him that “[t]he claim for award under Section 7623 is

still open and under active consideration” and that “a number of actions * * * must

be completed before a determination is made.”

      Petitioner’s counsel sent Ms. Stuart a number of follow-up letters between

February and June 2012. In her replies Ms. Stuart stated that the Office had not

yet received the information necessary to make a determination; that the Taxpayer

1 claim was not yet ready for decision; and that section 6103 prevented her from

discussing certain matters with petitioner’s counsel. In an email dated August 8,

2012, Ms. Stuart closed her message by stating: “As for your inquiry regarding

[the Taxpayer 1] claim * * * , I believe you spoke to [an Office employee] about

your concerns. I have included the Service’s position on this topic. If you still

have concerns you can contact me.”

      One concern petitioner’s counsel had expressed was whether FBAR pay-

ments would be includable in “collected proceeds (including penalties, interest,

additions to tax, and additional amounts)” that form the basis for an award under

section 7623(b)(1). Aware of this concern, Ms. Stuart attached to her email a

memorandum prepared for Stephen Whitlock by Mark S. Kaizen, Associate Chief

Counsel, IRS General Legal Services, dated April 23, 2012. This memorandum

articulates the legal foundation for the Office’s position that FBAR payments,
                                        -6-

[*6] because they are made pursuant to title 31 rather than title 26 of the U.S.

Code, are not “collected proceeds” within the meaning of section 7623(b)(1). The

Office received this advice after it had sought guidance on the matter. Ms. Stuart

attached this document to her email as a courtesy to petitioner.

      Petitioner’s counsel responded to Ms. Stuart by email the next day as fol-

lows: “Please confirm our reading of your email below that based on the Service’s

position expressed in the April 23, 2012 memo you attached your Office has now

officially denied [the Taxpayer 1] Claim.” At that time the Office had not

determined whether the Taxpayer 1 claim merited an award because it had not yet

learned from the operating side of the IRS whether or how petitioner’s information

was used, if at all, with respect to Taxpayer 1. Ms. Stuart accordingly responded

to petitioner’s counsel by email the next day, August 10, 2012, as follows:

      The [Taxpayer 1] claim * * * remains open. When the Whistleblower
      Office has made a determination related to the claims for award filed
      by [petitioner] you will be issued official written correspondence. At
      this point we have not made a determination regarding * * * any of
      the related claims. The Service’s position expressed in the April 23,
      2012 memo that I provided you was simply to let you know that at the
      point a determination can be made proceeds collected under Title 18
      and/or Title 31 would not be considered as part of the claim.

      Because the bulk of the proceeds collected from Taxpayer 1 consisted of

FBAR payments for violation of title 31, petitioner decided that there was nothing
                                          -7-

[*7] meaningful left for the Office to investigate with respect to this claim.

Petitioner thus viewed Ms. Stuart’s emails as a de facto determination that the

Taxpayer 1 claim had been denied.

      On September 6, 2012, petitioner filed a petition in this Court to challenge

that supposed determination. On December 21, 2012, respondent filed a motion to

dismiss this case for lack of jurisdiction. This motion contends that the IRS had

not yet made a determination regarding an award sufficient to confer jurisdiction

on this Court and that, in any event, petitioner’s claim relates to title 31 and falls

outside the scope of section 7623.

      During July or August 2013 the Office received information from the IRS

Criminal Investigation Division and the IRS Large Business and International

Division that the Government had not used petitioner’s information as a basis for

taking action against Taxpayer 1. The Office thereafter issued to petitioner, on

September 6, 2013, a letter that both parties agree constitutes a “determination”

that petitioner’s Taxpayer 1 claim has been denied. Petitioner filed a petition from

that determination, and the matter is currently pending before the Court. See

Whistleblower 22716-13W v. Commissioner, dkt. No. 22716-13W.

      Petitioner nevertheless opposes respondent’s motion to dismiss the instant

case for lack of jurisdiction. We agree with the parties that, despite the filing of
                                           -8-

[*8] the second petition, the instant case is not moot but continues to present a

justiciable case or controversy. Thus, we may decide whether to dismiss the

instant case for lack of jurisdiction.

                                         OPINION

      This Court always has jurisdiction to determine whether it has jurisdiction.

Cooper v. Commissioner, 135 T.C. 70, 73 (2010). The Tax Court is a court of

limited jurisdiction, and we must ascertain whether the case before us is one that

Congress has authorized us to consider. See sec. 7442; Estate of Young v. Com-

missioner, 81 T.C. 879, 881 (1983). We may not enlarge upon the statutory grant

of our authority. See Breman v. Commissioner, 66 T.C. 61, 66 (1976). In this

case, we must decide whether communications between petitioner’s counsel and

Ms. Stuart establish that the IRS had made, as of August 10, 2012, a “determina-

tion regarding an award” within the meaning of section 7623(b)(4) sufficient to

confer jurisdiction on this Court.

I.    Statutory Framework

      The IRS has long had authority to pay awards to persons, now called

“whistleblowers,” who provide information leading to the recovery of unpaid

taxes. See sec. 7623 (1954). The payment of such awards was solely discre-

tionary for many years. In response to concerns about the management of the
                                         -9-

[*9] discretionary award regime, Congress enacted legislation in 2006 to address

perceived problems with the whistleblower program. Tax Relief and Health Care

Act of 2006, Pub. L. No. 109-432, div. A, sec. 406, 120 Stat. at 2958 (effective

Dec. 20, 2006). The 2006 legislation added to section 7623 a new subsection (b),

which requires the payment of nondiscretionary whistleblower awards in specified

circumstances and provides this Court jurisdiction to review IRS determinations

regarding such awards. See Cooper, 135 T.C. at 73. A claimant who does not

meet the section 7623(b) requirements for a nondiscretionary award remains eli-

gible for an award at the IRS’ discretion under section 7623(a).

      Section 7623(b)(1) requires payment of an award if the IRS proceeds with

an administrative or judicial action to collect taxes “based on information brought

to the Secretary’s attention by an individual.” The award amount must be at least

15% and not more than 30% of “the collected proceeds (including penalties, inter-

est, additions to tax, and additional amounts) resulting from the action” or settle-

ment thereof. Ibid. The determination of the amount “shall depend upon the

extent to which the individual substantially contributed to such action.” Ibid.4

      4
      The IRS may determine a lower percentage award if the whistleblower
makes a less substantial contribution to the recovery or if the whistleblower
planned and initiated the activities leading to the underpayment of tax. Sec.
7623(b)(2) and (3). The IRS is directed to deny an award altogether if the whistle-
                                                                        (continued...)
                                         - 10 -

[*10] Section 7623(b)(5) defines the universe of claims that are subject to the

nondiscretionary award program established in subsection (b). The IRS must pay

claims on a nondiscretionary basis only with respect to actions against a taxpayer

whose “gross income exceeds $200,000 for any taxable year subject to such

action” and only “if the tax, penalties, interest, additions to tax, and additional

amounts in dispute exceed $2,000,000.” Sec. 7623(b)(5)(A) and (B).

      Section 7623(b)(4), captioned “Appeal of Award Determination,” governs

our jurisdiction over whistleblower claims. It provides: “Any determination re-

garding 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 juris-

diction with respect to such matter).” By referring to determinations “under para-

graph (1), (2), or (3),” section 7623(b)(4) makes clear that we have jurisdiction to

review only determinations concerning nondiscretionary awards authorized by

subsection (b).

II.   Analysis

      As jurisdictional provisions go, section 7623(b)(4) is rather unusual. Unlike

most other sections of the Internal Revenue Code that confer jurisdiction on this

      4
      (...continued)
blower is convicted criminally for planning and initiating such activities. Sec.
7623(b)(3).
                                        - 11 -

[*11] Court, section 7623(b)(4) does not prescribe any particular form of notice to

the would-be petitioner. Indeed, it does not literally require that the IRS provide

that person with written notice of any kind, but simply that it make a

“determination.” The statute’s failure to specify an unambiguous “ticket to the

Tax Court” has created serious interpretative and practical problems, both for

whistleblowers and for the Court.

      We addressed certain of these problems in Cooper v. Commissioner, 135

T.C. at 75. We there held that we have jurisdiction to review not only an IRS

determination concerning the amount of an award but also “any determination to

deny an award.” In ascertaining whether the IRS has made a determination to

deny an award, we held that “the labeling [of an IRS communication is] not

dispositive” and “does not control whether the document constitutes a deter-

mination.” Ibid. We found that the letter issued in Cooper, while not labeled a

determination, “states respondent’s final conclusion that petitioner is not entitled

to an award and provides an explanation for this conclusion.” Id. at 76. Because

the letter constituted “a final administrative decision regarding petitioner’s

whistleblower claims in accordance with the established procedures,” we held that

it constituted a “determination regarding an award” within the meaning of section
                                         - 12 -

[*12] 7623(b)(4) and that we accordingly had jurisdiction to review it. 135 T.C.

at 76.5

          Under these standards, it seems clear that the email exchanges between Ms.

Stuart and petitioner’s counsel do not establish that the Office had made, as of

August 10, 2012, a “determination” to deny the Taxpayer 1 claim. To the con-

trary, Ms. Stuart’s email of that date stated that the Taxpayer 1 claim “remains

open” and that petitioner would “be issued official written correspondence” once

the Office did make a determination regarding this claim. As of August 10, 2012,

the Office was still waiting to hear from the relevant IRS operating divisions whe-

ther the information petitioner supplied had led to the action against Taxpayer 1.

This is an essential element that must be satisfied before the IRS can make a non-

discretionary award determination under section 7623(b)(1). Since the Office was

still investigating this issue, it had not yet made “a final administrative decision




          5
        Consistently with our Opinion in Cooper, 135 T.C. at 75, we have held that
the labeling of an IRS communication is not dispositive in ascertaining whether it
has made a “determination” sufficient to afford us jurisdiction under other Code
provisions. See, e.g., SECC v. Commissioner, 142 T.C. __, __ (slip op. at 7)
(Apr. 3, 2014) (IRS letter was a “determination” concerning worker classification
for purposes of section 7436(a)); Corbalis v. Commissioner, 142 T.C. __, __ (slip
op. at 21-22) (Jan. 27, 2014) (IRS letter was a “determination” concerning interest
abatement for purposes of section 6404(h)).
                                       - 13 -

[*13] regarding petitioner’s whistleblower claim[] in accordance with the estab-

lished procedures.” See Cooper, 135 T.C. at 76.

      In urging a contrary conclusion, petitioner relies on what he regards as the

plain meaning of the word “any.” See sec. 7623(b)(4). According to petitioner:

“Congress chose not to limit this broadest of jurisdictional delegations with modi-

fiers on the word ‘any’ such as ‘dispositive’ or ‘material.’” Petitioner contends

that we should not read into the statute any limiting language and that “‘any de-

termination regarding an award’ means just that.”

      We are not persuaded. In her August 10, 2012, email, Ms. Stuart informed

petitioner’s counsel that the Office had received legal advice that FBAR payments

cannot be included in “collected proceeds” for purposes of making awards under

section 7623(b). She accordingly advised him that, “at the point a determination

can be made,” proceeds collected under title 31 “would not be considered as part

of the claim.” As we held in Cooper, 135 T.C. at 75, a “determination regarding

an award” means a determination as to “the amount of an award” or a determina-

tion “to deny an award.” Congress cannot possibly have intended that this phrase

would embrace every subsidiary finding of fact or conclusion of law that enters

into the Office’s ultimate decision as to whether an award is appropriate and (if so)

the amount thereof.
                                         - 14 -

[*14] Even if the Office’s policy decision concerning FBAR payments, consid-

ered in isolation, does not constitute a “determination regarding an award,” peti-

tioner insists that it constitutes a de facto determination on the particular facts of

this case. That is so, petitioner contends, because more than 99% of the aggregate

recovery from Taxpayer 1 consisted of FBAR payments. According to petitioner,

this demonstrates that the Office had “nothing left to investigate” regarding this

claim once it concluded that the FBAR component could not qualify.

      Contrary to petitioner’s assertion, there was something left for the Office to

investigate--namely, whether the action against Taxpayer 1 was “based on inform-

ation brought to the Secretary’s attention by [petitioner]” and, if so, whether the

information petitioner provided had “substantially contributed” to that recovery.

See sec. 7623(b)(1). Section 7623(b)(4) gives us jurisdiction to review “any deter-

mination regarding an award under paragraph (1), (2), or (3).” The IRS cannot

make a “determination” under paragraph (1) until it has completed its review of all

elements specified in that paragraph. The Office did not receive from the IRS

operating divisions, until July or August 2013, the information necessary to ascer-

tain whether the action against Taxpayer 1 was “based on information brought to

the Secretary’s attention by [petitioner]” or whether petitioner’s information “sub
                                         - 15 -

[*15] stantially contributed” to that recovery. Only then was the Office in a posi-

tion to make a conclusive “determination” regarding the Taxpayer 1 claim.

      This holding is supported not only by the statute’s language but also by

sound principles of judicial policy. It is the policy of this Court “to try all the

issues raised in a case in one proceeding to avoid piecemeal and protracted litiga-

tion.” Haft Trust v. Commissioner, 62 T.C. 145, 147 (1974). The goal of this

policy is to avoid the inefficiency and duplication of effort, with its “attendant

delay and waste of time,” that piecemeal litigation inevitably entails. See Kovens

v. Commissioner, 91 T.C. 74, 78 (1988). As the facts of this case show, our

assumption of jurisdiction before the Office has concluded its entire investigation

would necessarily lead to piecemeal litigation.

      When petitioner filed his petition in our Court, the Office had not yet ascer-

tained whether his information had led to action against Taxpayer 1. Suppose that

we had taken jurisdiction of this case and decided the question petitioner poses--

whether FBAR payments constitute “additional amounts” within the meaning of

section 7623(b)(1) and (5)(B) and are thus properly includable in the basis for a

nondiscretionary award. We now know that the Office concluded, after petitioner

filed the instant petition, that his information did not lead to the recovery from

Taxpayer 1, so that he would not be entitled to an award regardless of whether
                                         - 16 -

[*16] FBAR payments constitute “additional amounts.” If that conclusion is

correct, the FBAR question would then be moot, and our opinion addressing this

issue would be an advisory opinion. This demonstrates the practical importance of

allowing the Office to conclude all aspects of its investigation and render “a final

administrative decision * * * in accordance with the established procedures,”

Cooper, 135 T.C. at 76, before we undertake review of an award determination.

       Accepting petitioner’s interpretation of section 7623 would produce absurd

or futile results, and a well-established rule of statutory construction is to avoid

such outcomes. See Colestock v. Commissioner, 102 T.C. 380, 387 (1994) (citing

United States v. Am. Trucking Ass’ns, 310 U.S. 534, 543-544 (1940). Under-

taking premature review of whistleblower claims would inevitably lead to piece-

meal litigation and prevent us from trying all issues in one case. Both the plain

language of the statute and principles of judicial policy thus support the conclu-

sion that the instant petition is premature and that we lack jurisdiction over it.

III.   Foreign Bank Account Reporting

       In the alternative, respondent contends that this Court lacks jurisdiction

because payments under title 31 are outside the scope of section 7623(b)(5)(B)

and are therefore outside the scope of our jurisdiction under section 7623(b)(4).

Petitioner agrees that this issue is jurisdictional and urges that the Court resolve it.
                                       - 17 -

[*17] Because we have concluded that the Office did not make a “determination”

within the meaning of section 7623(b)(4) sufficient to confer jurisdiction on this

Court, we need not decide whether FBAR payments are “additional amounts” for

purposes of ascertaining whether the monetary threshold in section 7623(b)(5) has

been met, or whether that question is a jurisdictional one. See Friedland v. Com-

missioner, T.C. Memo. 2011-217, 102 T.C.M. (CCH) 247, 249 (not addressing the

monetary threshold question when granting respondent’s motion to dismiss for

lack of jurisdiction).

      To reflect the foregoing,


                                                An order of dismissal for lack of

                                       jurisdiction will be entered.
