Continuing in what seems to be a series of cases on when the Tax Court gets jurisdiction, the appropriately titled case of Whistleblower 26876-15W v. Commissioner provides guidance on how to gain entry into the Tax Court in this relatively new type of case. The Court finds that it has jurisdiction even though the petitioner argues that it did not. The petitioner argued that the decision of the IRS to deny an award was “null and void” and seeks to have the Tax Court make that determination as it determines it has no jurisdiction. The recent post on what the Tax Court can do after it determines it lacks jurisdiction might have come into play here, except that, despite the protestations of the petitioner, the Court determines it has jurisdiction. This funny role reversal of the petitioner arguing the Tax Court lacks jurisdiction while the IRS argues for jurisdiction also shows that last known address cases arise in the whistleblower arena as well as other types of Tax Court cases.read more...
Petitioner here filed the IRS Form 211 seeking an award with respect to information provided to the IRS. The IRS decided that the information did not merit an award and sent the letter denying the claim for award to somewhere other than petitioner’s last known address. Petitioner did not receive the letter. Because petitioner did not receive the letter stating that the IRS would not pay an award, the petitioner waited in limbo for quite some time.
Eventually, petitioner contacted the Whistleblower Office seeking information about the claim. For those of you accustomed to waiting to hear from the IRS about one thing or another, it is easy to step into petitioner’s shoes here as the wait for information gnaws at you. As an aside, I note that the IRS has recently introduced a feature that allows you to track your amended return. Here is a link to the place you go to do the tracking. What a great idea! I hope it does not take long before a similar tracking system exists for many other types of matters for which taxpayers, and their representatives, wait for the IRS. Somehow, waiting seems to go more smoothly, up to a point when you can track the matter and not wonder if it is lost somewhere in the IRS system.
The whistleblower in this case gave information that the examination division of the IRS thought had value and it audited at least one of the taxpayers implicated by the information provided. The audit resulted in adjustments which the taxpayer took to Appeals. At Appeals, the taxpayer convinced the Appeals Officer that the adjustments lacked merit. In November 2013, Appeals conceded the case and determined that the case should be “no-changed.” The report written by the Appeals Officer about the case made its way back to the Whistleblower Office at the IRS where, in January 2014, an employee completed Form 11369, Confidential Evaluation Report on Claim for Award, and recommended the denial of the claim. On May 30, 2014, the IRS sent petitioner a final determination letter with respect to the award denying the claim for award in full.
Petitioner moved in 2013 and properly notified the Whistleblower office of the new address. My guess is that of the 1% of people who move and who actually notify the IRS of the move, those making whistleblower requests fall into the 1%. Despite notifying the IRS, when it sent to petitioner the final determination letter, the IRS sent the notice to the prior address. The patient petitioner, who would have no basis for knowing when the IRS might make a determination regarding the award, waited for almost a year and a half after the IRS sent the notice of final determination before requesting an update on the status of the award request. In September of 2015, petitioner reached out to the Whistleblower Office seeking an update and on October 15, 2015, the IRS sent a letter informing petitioner that it had denied his claim. Petitioner alleged that the October 15 letter was the first he learned of the denial and petitioner used that letter as the basis for filing a petition in Tax Court, which was filed on October 26, 2015.
In whistleblower cases, the Tax Court has jurisdiction under IRC 7623(b)(4) if the IRS makes a “determination regarding an award” and “a petition invoking our jurisdiction over that matter is timely filed.” Petitioner filed the petition hoping for a result similar to the result petitioners receive in Tax Court cases based on a notice of deficiency cases where the IRS sends the notice to someplace other than the taxpayer’s last known address and the Tax Court finds that it lacks jurisdiction for the reason that the notice of deficiency is invalid. The Court did not go where the petitioner hoped it would go.
Petitioner’s first argument regarding the lack of validity of the notice denying the award did not attack the mailing address but rather the authority of the person signing the notice. Delegation Order 25-7 delegated the authority to approve or disapprove awards to the Director of the Whistleblower Office. The notice here was signed by an analyst in the office rather than by the director of the office. The Court takes little time dispensing with this argument holding that the delegation order gave to the director the authority to approve or disapprove awards but did not require the director to personally sign the letter notifying the taxpayer of the approval or disapproval. The Court found that the director had signed the Form 11369 determining that the claim was disallowed, and the director’s signature there met the requirements of the delegation order.
Next, the Court turned to the issue of its jurisdiction based on the timing of the filing of the petition. It noted that generally the 30-day period within which to timely file a whistleblower petition begins on the date the determination is mailed to a claimant’s last known address or is personally delivered to the claimant. The Tax Court had not previously addressed this question in the whistleblower context. It noted that the statute at play here closely resembled section 6330(d) controlling jurisdiction in a Collection Due Process (CDP) case, which says that a taxpayer dissatisfied with the CDP determination made by the IRS “may, within 30 days of a determination under this section, appeal such determination to the Tax Court (and the Tax Court shall have jurisdiction with respect to such matter.)” The Court found that neither the CDP nor the whistleblower statutes require the IRS to send the notice of determination by certified mail to the taxpayer’s last known address or to deliver it in any particular way. Interestingly, the Court went on to find that neither statute requires that the IRS notify the taxpayer (or the claimant) at all. The statutes only require that the IRS make a determination.
Judge Lauber cites to the case of Bongam v. Commissioner, 146 T.C. 52 (2016) in which the IRS mailed the notice of determination to an address other than the taxpayer’s last known address. “Several months later … the IRS remailed the notice to the taxpayer’s last known address by regular mail” and the taxpayer received the remailed notice and filed a petition within 18 days of that receipt. In Bongam, the Tax Court held that the first notice was invalid because it was not sent to taxpayer’s last known address and was not actually received by the taxpayer; however, the remailed notice gave the Court a basis for jurisdiction because the taxpayer petitioned within 30 days of receipt.
The reasoning in Bongam applies to this whistleblower case. The Court found that the remailed notice of determination which the claimant used as a basis for petitioning validly serves as the notice of determination. So, the petitioner in this case now has the opportunity to show the determination incorrectly denied the claim even though the claimant did not seek that result.