The Tax Court in Brief – August 1st – August 5th, 2022
Freeman Law’s “The Tax Court in Brief” covers every substantive Tax Court opinion, providing a weekly brief of its decisions in clear, concise prose.
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Tax Litigation: The Week of August 1st, 2022, through August 5th, 2022
Whistleblower 769-16W v. Comm’r, 159 T.C. No. 2 | August 4, 2022 | Toro, J. | Dkt. No. 769-16W
Short Summary: This is a limited- but novel-issue opinion. Petitioner and the IRS submitted a Joint Motion to Remand asking the Tax Court to enter an order and decision vacating prior determinations of the Whistleblower Office (WBO) and remanding the claims to the WBO for further consideration without retaining jurisdiction. The case began in 2016 and, over the years, required the Tax Court to confront novel issues concerning the application of section 7623(b), some of which were remanded to the WBO for further proceeding. In this situation, the parties jointly moved for another remand, to (1) permit the WBO to evaluate the contribution of the whistleblower’s information to any ongoing IRS action against certain targets and (2) without the Tax Court retaining jurisdiction.
Key Issue:
- (1) Whether the Tax Court may enter a decision vacating the prior determinations of the Whistleblower Office (WBO) of the IRS and remand Petitioner’s claims to the WBO for further consideration without retaining jurisdiction?
Primary Holding:
- (1) Yes, the Tax Court has discretion to remand the claims to the WBO for further consideration without retaining jurisdiction.
Key Points of Law:
- The Tax Court has discretion to permit whistleblowers to move the Court to dismiss their cases. Jacobson v. Commissioner, 148 T.C. 68, 68-71 (2017).
- Nothing in I.R.C. § 7623(b) precludes the Tax Court from granting a joint motion to vacate and remanding the claims in issue to the WBO for further consideration without retaining jurisdiction.
- The Tax Courts has the discretion to retain jurisdiction over a case pending completion of a remand and to order the filing of progress reports, which may well facilitate immediate review of further proceedings before the agency being reviewed without the formalities of a new appeal.
- 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. By retaining jurisdiction, the Tax Court facilitates a more immediate review of a matter remanded without requiring an unnecessary filing of a new appeal. This is ordinarily advisable in whistleblower cases so as to facilitate resolution of disputes through expeditious remand proceedings.
- 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 the Tax Court retaining jurisdiction with respect to any remand for a supplemental hearing in cases under section 6330.
- By contrast, nothing in section 7623(b) contemplates that a whistleblower is limited to one proceeding before the WBO. Thus, even if the Tax Court consents to divest itself of jurisdiction over a matter arising under section 7623, subsequent but new appeals may be available.
Insight: This opinion likely has limited application. But, where the whistleblower and the IRS jointly agree to vacate orders and divest the Tax Court of jurisdiction over matters remanded to the WBO to allow for further proceeding, nothing in the Code prohibits that jurisdictional divestment.
