Whistleblower Case Dismissed – Could All Writs Provision Have Saved It?

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In McCrory v. Commissioner, 156 T.C. No. 6 (2021) the Tax Court issued a precedential opinion holding that McCrory came to the Tax Court before she received what the Tax Court felt was the proper ticket.  Ms. McCrory represented herself in the Tax Court case.  As discussed below, she may have had an argument that she did not make.  It’s tough for everyone when the court creates precedent based on a one sided argument.


Ms. McCrory sent the IRS 21 separate claims for whistleblower awards in 2015.  Her claims were based on public records and alleged that the taxpayers about whom she provided information had underreported awards obtained in a litigation settlement.  She received from the IRS Whistleblower office a letter offering her an award if she agreed to accept the award in full settlement and waive her right to go to court.  The letter also offered a second option by which she would indicate disagreement with the proposed offer.  Instead of accepting the offer or indicating disagreement, she asked for access to the IRS administrative file in order to make a more informed decision.

This seemingly reasonable request pits her need for information against the requirement that the IRS keep taxpayer information confidential – a tension that exists regularly in whistleblower cases.  The IRS told her it could not provide the information she wanted, and she petitioned the Tax Court in response to the IRS letter denying her the right to information.  The letter denying her the right to information did not deny her whistleblower claim.

The IRS moved to dismiss her petition for lack of jurisdiction arguing that she filed the petition prematurely.  Essentially, the IRS argues that the Tax Court lacks jurisdiction to review its determination regarding the information she may see and even if at some point the Tax Court has jurisdiction over the issue of the information she can see, it lacks that jurisdiction prior to the time the IRS makes a formal determination regarding the amount of award she should receive, if any. As the Tax Court frames the case:

The sole issue for decision is whether the letter respondent sent to petitioner recommending a preliminary award under section 7623(a) constitutes a “determination” within the meaning of section 7623(b)(4).

The tricky thing about whistleblower cases is that the statute doesn’t say what action by the IRS constitutes a determination.  Unlike deficiency cases where the statute provides much more guidance regarding the “thing” that gives a taxpayer a ticket to the Tax Court, the whistleblower statute comes up short in this area.  The court notes:

[w]e have held that the name or label of a document does not control whether the document constitutes a determination” and that “our jurisdiction is established when the Commissioner issues a written notice that embodies a determination.” Cooper v. Commissioner, 135 T.C. 70, 75 (2010).

The Tax Court had not previously issued a specific opinion regarding the document the IRS calls a preliminary award recommendation and whether this letter could qualify as a basis for Tax Court jurisdiction.  In the Cooper case the court held that another letter that did not call itself a determination letter did provide a basis for jurisdiction. 

So, Ms. McCrory’s petition in the context of the whistleblower statute deserved a close look.  The court described her argument as follows:

Petitioner contends the preliminary letter embodied a “determination” because the letter: (1) requested that she waive her appeal rights; (2) did not indicate that the preliminary award amount would change; and (3) did not indicate that a subsequent determination would be issued.

In finding that the letter Ms. McCrory received did not serve as a determination of the type to provide it with jurisdiction, the court was not surprisingly influenced by the wording of the letter stating it was a preliminary award determination.  Even though the IRS may not have changed its mind had she checked the box declining the proffered settlement, the court found that another step needed to occur before the IRS had issued the type of determination needed to invoke its jurisdiction.  It noted that the sending of the preliminary award letter complied with the framework of the regulations under section 7623(a).

Ms. McCrory also requested that the court order the IRS to issue a determination so she could move forward and save her time and the court’s time in getting to a determination of the proper amount of her award.  The court declined to do this since it had no jurisdiction over the matter.  It said:

In the event we agree with respondent, as we have, petitioner alternatively asks that the Court either order respondent to issue a final decision or consider the preliminary award recommendation a final decision in the interests of judicial economy. As previously stated, the Court may exercise jurisdiction only to the extent authorized by Congress and is without authority to enlarge upon that statutory grant. Judge v. Commissioner, 88 T.C. at 1180-1181Naftel v. Commissioner, 85 T.C. at 529; see Phillips Petroleum Co. & Affiliated Subs. v. Commissioner, 92 T.C. at 888Section 7623(b)(4) authorizes this Court to exercise jurisdiction when a determination has been made. Kasper v. Commissioner, 137 T.C. at 41. Since we have concluded that respondent has not made a “determination”, we lack authority to enlarge upon that statutory grant by deeming the preliminary award recommendation to be a “determination” for purposes of our review. Likewise, we decline to order respondent to issue a final decision or to intervene in the whistleblower administrative process.

This portion of the opinion drew a comment from former frequent guest blogger Carl Smith.  Carl found it very disappointing to see this last sentence in a precedential T.C. opinion without a discussion of the All Writs Act.  The All Writs Act allows a supervising court to order an agency to act.  In a case years ago named Insinga, Judge Gustafson asked the parties to brief the applicability of the All Writs Act in a similar case.  In a PT post Carl wrote on the Tax Court’s Myers opinion, he discussed and linked to the order in Insinga.  Here’s from the order:

The amicus curiae (National Whistleblower Center) argues in the alternative that where an award determination has been unreasonably delayed, the Tax Court has jurisdiction–in light of § 7623(b)(4) and under § 706(1) of the Administrative Procedures Act (“APA”), 5 U.S.C. § 551 et seq.–to “compel agency action unlawfully withheld or unreasonably delayed”. Respondent counters that the APA itself confers no jurisdiction and that the mandamus statute (28 U.S.C. § 1361) by its terms gives jurisdiction only to “[t]he district courts”. Respondent is correct; but the “All Writs Act” (28 U.S.C. § 1651) applies to “all courts established by Act of Congress” (cf. 26 U.S.C. § 7441, establishing the U.S. Tax Court); and the U.S. Court of Appeals for the D.C. Circuit has held in Telecommunications Research and Action Center v. FCC, 750 F.2d 70, 75 (D.C. Cir. 1984) (“TRAC“), that, in view of the APA and the All Writs Act, “it is clear–and no party disputes this point–that” if a statute (there, 28 U.S.C. § 2342(1)) confers on a court exclusive jurisdiction to review a final agency order, then even before the final order has been issued, the court has “jurisdiction over claims of unreasonable [agency] delay”. (The D.C. Circuit would appear to be the default venue for any appeal in this case; see 26 U.S.C. § 7482(b)(1).)

We have not decided whether the reasoning in TRAC applies to the Tax Court and its jurisdiction under § 7623(b)(4). Nor have we decided whether, if the APA does not directly apply, this case nonetheless presents one of those instances in which the Tax Court, “in appropriate circumstances, borrow[s] principles of judicial review embodied in the APA.” Ewing v. Commissioner, 122 T.C. 32, 54 (2004) (Thornton, J., concurring).

We believe we ought not to reach those questions if we do not need to do so.

The issue in Insinga was rendered moot before Judge Gustafson ruled when the IRS issued a final determination letter. 

Maybe Ms. McCrory will consider doing a motion to reconsider the All Writs Act authority, though it is possible that the judge will still say he declined to issue an order, whether or not he had the power.  This may be an opportunity for someone in the Whistleblower bar to step in and assist a pro se petitioner on a matter that might have broader implications.  The opinion does not state that he lacks the power, though it is clearly implied by the sentences preceding the holding that discuss lack of power in other situations.


  1. Robert Kantowitz says

    We need to know more. If this case is still in a posture in which the whistleblower could decline the award and have the IRS reasonably quickly issue a final determination that would give the Tax Court jurisdiction, there is less reason to invoke the All Writs Act than if that action by the whistleblower would result in the IRS refusing to issue any final determination whatsoever. There is a general sense, borne out by some cases, that the IRS delays and resists paying whistleblower awards, but there is also a good reason to follow regular order and not to order an agency, even one as dysfunctional and reviled as the IRS, to do something now if it has reason to take the position that it will do it, but only after an individual makes a decision or takes some action that the agency has reasonably requested. So, the Tax Court should force the IRS to make a final decision only if what the IRS is doing is imposing unreasonable delay after unreasonable delay with a view to avoiding ever having to either pay an award or have its inaction reviewed.

    The larger issue here is the extent to which the whistleblower program does not work because it is a one way street. The whistleblower provides information but does not participate in any process, and then a take-it-or-leave-it award offer or denial emerges. Not every whistleblower claim merits serious attention, nor is it obvious that every whistleblower is in a position to provide the IRS with assistance that would actually be useful, but in sone cases, why not, and in all, why not provide at least some progress reports and feedback?

  2. Sue McCrory says

    Let me offer a few more details. My preliminary award letter listed 21 claims but, IRS declined to specify which claim(s) of the 21 had proceeded to audit or had collections. That seemed remarkably secretive to me and the Tax Court did manage to prod the specific claims involved from the Whistleblower Office. The prelim award letter had a date when things would be final if I disagreed with the recommendation and the Tax Court waited until this date before acting. Perhaps that date might have been a triggering event for the All Writs Act’s applicability?

    But I learned that IRS “suspends” whistleblower cases when a tax court petition is filed. The “suspension” apparently trumped the whistleblower claim final determination date. As soon as the court decision was rendered, the suspension was lifted, and I received a final determination letter saying exactly the same thing as the preliminary award determination.

    More generally, I believe that the practice of “suspending” cases when a tax court petition is filed is inappropriate for whistleblower claims because it effectively prevents IRS from administratively resolving anything until a tax court ruling is issued. So maybe the All Writs Act has implications for this administrative “suspension” as well?

    Ultimately, I filed yet another Tax Court petition on the final award determination.

    Happy to consult folks practicing in this area if anybody thinks I have created a bad precedent that might be modified.

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