Whistleblower Matters - Update (4/21/18)

I have made updates to the working draft of the Federal Tax Procedure book based, in part, on a recent posting on the Procedurally Taxing Blog -- Keith Fogg, Don’t Expect a Whistleblower Award for Giving the IRS Privileged Information and General Information from the Judicial Conference on this Issue (Procedurally Taxing Blog 4/16/18), here.  Also included in the updates are the recent statutory changes to the whistleblower awards program.  I link here a pdf of a red-line of the Whistleblower chapter -- Chapter 19.  Whistleblower Awards -- showing the changes in the working draft from the 2018 edition.  This is a footnoted edition of the draft of the chapter.  The principal new items covered are:]

• The change in the statute from "collected proceeds" to "proceeds" with a broadening of the base for whistleblower awards to clearly encompass non Title 26 collections (such as FBAR penalties and criminal fines related to tax crimes).
• The scope of review for Tax Court whistleblower cases.
• Appellate venue to the D.C. Circuit Court of Appeals for Tax Court whistleblower cases.
• The WBO's fye 2017 statistics for whistleblower cases.

Congress Amends Tax Whistleblower Section, § 7623, to Clarify Broad Reading of the Award Base (2/24/18)

Earlier this month, Congress amended the mandatory minimum tax Whistleblower award program to make clear that proceeds for purposes of the award base includes non Title 26 collections for fines, forfeitures and reporting violations (such as FBAR penalties).  See § 41108 of the Bipartisan Budget Act of 2018, P.L. 115-123, here.  The change is effected by using the term "proceeds" rather than "collected proceeds and adding § 7623(c) to provide as follows.

(c) Proceeds.—For purposes of this section, the term ‘proceeds’ includes—
   (1) penalties, interest, additions to tax, and additional amounts provided under the internal revenue laws, and
   (2) any proceeds arising from laws for which the Internal Revenue Service is authorized to administer, enforce, or investigate, including—
      (A) criminal fines and civil forfeitures, and
      (B) violations of reporting requirements.

The expanded definition is both for the award base and for the minimum proceeds for § 7623(b).


I have revised my discussion of the Whistleblower Chapter, Chapter 19, in my working draft of my Federal Tax Procedure Book (pending the next publication) to incorporate these changes and attach a red-lined version of it here. 

Good History Lesson on the Interface of Civil Procedure and Tax Refund Suits (2/2/18)

In United States v. Stein, 2018 U.S. App. LEXIS 2392 (11th Cir. 2018) (en banc), here, the Eleventh Circuit unanimously held that "an affidavit which satisfies Rule 56 of the Federal Rules of Civil Procedure may create an issue of material fact and preclude summary judgment even if it is self-serving and uncorroborated."  For civil trial lawyers, this seems an unexceptional holding, which is why it was a unanimous en banc opinion.  But there is some trial procedure intrigue behind the holding which explains why the panel opinion predicate to the en banc opinion held otherwise.  See United States v. Stein, 840 F.3d 1355 (11th Cir. 2016), here.

The background was Mays v. United States, 763 F.2d 1295 (11th Cir. 1985), here, which was the authority cited in the panel opinion.  In Mays, the court granted summary judgment on the following basis (emphasis supplied by JAT):

In a tax refund suit, the Commissioner's deficiency determinations are presumed correct, and the burden of proof is on the taxpayer to show that the Commissioner's findings were erroneous. Helvering v. Taylor, 293 U.S. 507, 514-15, 55 S.Ct. 287, 290-91, 79 L.Ed. 623 (1935); Anselmo v. Commissioner, 757 F.2d 1208, 1211 (11th Cir.1985). A taxpayer seeking a refund must show not only that the Commissioner erred, but must establish the correct amount of the refund due. King v. United States, 641 F.2d 253, 259 (5th Cir.1981)*; Crosby v. United States, 496 F.2d 1384, 1390 (5th Cir.1974). The claim must be substantiated by something other than tax returns, Lunsford v. Commissioner, 212 F.2d 878, 883 (5th Cir.1954), uncorroborated oral testimony, Griffin v. United States, 588 F.2d 521, 530 (5th Cir.1979), or self-serving statements. See Gibson v. United States, 360 F.2d 457, 462 (5th Cir.1966). 

Mays does not dispute that the computer printout he submitted with his response to the government's interrogatories was prepared after the tax audit; indeed, the "amount allowed by auditor" appeared on the face of the printout. His net worth statements did not refer to any original records, and he presented no contemporaneous documentation of his expenses or other evidence to establish that the Commissioner's tax assessment was wrong or to establish the correct amount due. In sum, Mays did not overcome the presumption of correctness due determinations of the Commissioner. Rather, he has submitted only self-serving documents which do not substantiate his claims. Accordingly, the government was entitled to summary judgment.

The Stein en banc opinion reverses Mays on straight-forward trial civil procedure grounds. Uncorroborated properly submitted affidavit testimony on a key factual issue can avoid summary judgment.  The effect of denying summary judgment is that the party opposing summary judgment can go to trial on that issue.  Trial can be either to a jury (if requested and the type of fact issue triable to a jury) or to a judge.

In tax cases, refund suits may be tried to a jury.  The majority en banc opinion does not get into the particular tax issue, other than to say that there is nothing unique about taxes that would require a different result than compelled by the ordinary civil procedure rules.  But, the tax setting is an entre for Judge William Pryor to talk in a concurring opinion about the unique historical role of taxes, procedure and jury trials.  I want to focus on Judge William's concurring opinion, but first I conclude the discussion of the majority opinion:

Distinguishing the Internal Revenue Code from Title 26 (11/27/17)

In my working draft for the 2018 edition of my Federal Tax Procedure book (scheduled for publication in August 2018), I have recently revised my discussion on Codified and Uncodified Laws in relation to the Internal Revenue Code of 1986 (IRC) and Title 26 (which is not the enacted revenue law).  For some, that may be confusing, as it was for me until recently.  So, I offer my understanding of what all that means by presenting a summary discussion below of the revised discussion and the full text of the revised discussion here.  (I also will include this revised discussion in my next current supplement to the Federal Tax Procedure Book. 2017 Editions)  Here is the summary discussion with supporting links at the end of the blog:

All statutes are enacted by Congress as Statutes at Large.  Statutes at Large are said to be "positive law."  The Statutes at Large are direct and conclusive evidence of the law.

Congress has authorized the House Office of Law Revision to compile common subjects in the various Statutes at Large into Titles which are not "positive law" -- i.e., the Titles have not been enacted -- they are simply compilations of underlying Statutes at Large and, by statute, are only prima facie evidence of the law -- the underlying Statutes at Large.  See 1 USC § 104(a), here.

Sometimes Congress will enact a Title as a Statute at Large.  Most importantly for tax procedure purposes, the IRC has been enacted as a Statute at Large and is positive law.  The IRC is thus the law.  This enactment occurred in 1939 and again in 1954.  The 1954 enactment was named the Internal Revenue Code of 1954.  In 1986, Congress renamed that enactment as the Internal Revenue Code of 1986, at the same time that substantial amendments to various provisions of that Code were enacted.  But -- and this is critical -- Congress did not enact the IRC as Title 26 of the U.S. Code.  The House Office of Law Revision has compiled -- actually mirror imaged -- the IRC into Title 26.

Therefore, the correct conclusive citation to any provision of the IRC is to the IRC (which is the law) and not to Title 26 (which is only prima facie evidence of the IRC).  Still, most courts and commentators usually cite to Title 26.

And, some statutes that affect the application of the revenue laws are not in the IRC, and therefore not in Title 26 (the IRC mirror image).  A good example of such “uncodified” tax law is § 530 of the Revenue Act of 1978, which is legislation giving taxpayers certain relief in the ongoing problem of characterizing service provides as employees or independent contractors; that uncodified provision is referred to in a note to 26 U.S.C. § 3401, here [scroll to bottom of the notes].

Helpful links for this subject may be found in the following (which are referenced in the footnotes to the excerpt from the current revision of the Tax Procedure Book referenced above.:

• Library of Congress web page on Statutes at Large, here.
• House Office of Law Revision Counsel Guide, here, 
• House Office of Law Revision Counsel Positive Law Codification, here.
• House Office of Law Revision Counsel list of codified (positive law) and uncodified (not positive law) Titles of the U.S. Code, here. [Note that the positive law titles are identified by an asterisk]  For a list of the codified titles only, see the note to 1 U.S.C. § 104(a), here.
• Yin, George K., Codification of the Tax Law and the Emergence of the Staff of the Joint Committee on Taxation, pp. 19 (August 1, 2017). Virginia Law and Economics Research Paper No. 2017-20; Virginia Public Law and Legal Theory Research Paper No. 2017-39. Available at SSRN: https://ssrn.com/abstract=3008878
• Will Baude, Reminder: The United States Code is not the law (The Volokh Conspiracy 5/15/17), here.  
• Tobias A. Dorsey, Some Reflections on Not Reading the Statutes, 10 Green Bag 282 (2007), here.

Excellent Article on the Necessity of Chevron or Something Like in the Administrative State (11/25/17)

A significant topic in my Federal Tax Procedure book and in many tax procedure books and classes is the subject of Chevron deference.  Chevron U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837 (1984).  Chevron deference has some influential critics -- including Justices Thomas and Gorsuch and a number of others, including legislators who rail against the administrative state. 

An excellent article arguing that Chevron or something like it is necessary for the administrative state -- Nicholas R. Bednar & Kristin E. Hickman, Chevron's Inevitability (2017). 85 Geo. Wash. L. Rev. 1392 (2017) (available on SSRN here). Kristin Hickman is a leading authority on Chevron.  The abstract is

For over thirty years, Chevron deference has been the target of criticism. Now, some judges and legislators are calling for an end to Chevron, and legal scholars are heralding the doctrine’s retreat. Chevron may be evolving, as common law often does. But claims that Chevron is in decline are overblown, and efforts to overturn Chevron in any meaningful sense are misdirected. Chevron-style deference is inevitable in the modern administrative state. The real “problem” — to the extent one sees it as such — is not Chevron but rather unhappiness with the natural consequences of congressional reliance on agencies to resolve major policy issues.

Although the whole article is worth reading, I found the following excerpt in the introduction helpful:

Finally, predictions of (or hopes for) Chevron’s pending demise fail to take into account that Chevron deference, or something much like it, is a necessary consequence of and corollary to Congress’s longstanding habit of relying on agencies to exercise substantial policy-making discretion to resolve statutory details. As administrative law’s best-known doctrine, Chevron has become a convenient scapegoat or bogeyman for those who are unhappy with the administrative state or judicial review of agency action. But unless Congress chooses to assume substantially more responsibility for making policy choices itself or the courts decide to seriously reinvigorate the nondelegation doctrine—neither of which seems remotely likely—at least some variant of Chevron deference will be essential to guide and assist courts from intruding too deeply into a policy sphere for which they are ill-suited.

And this excerpt from the conclusion:

CONCLUSION 

Reports of Chevron’s demise are greatly exaggerated, and efforts to overturn Chevron aim at the wrong target. Certainly, Chevron is a highly imperfect doctrine. The opinion itself is confusing. Courts are inconsistent when they apply it, adding to the confusion. Legitimate questions abound regarding Chevron’s proper scope and operation. Undoubtedly, there remains room for improvement and clarification. 

Yet, casting Chevron as administrative law’s bogeyman has always been a bit overwrought. Chevron undoubtedly is not what the Framers had in mind, but then again, neither is the modern regulatory state. So long as agency officials possess the authority to  make major policy decisions, Chevron—or something much like it—will survive. Congress will continue delegating, so courts will continue deferring in some number of cases. To the extent that courts and commentators want to curtail the administrative state, they should focus their efforts on rolling back congressional delegations of policymaking discretion to agency officials rather than overturning Chevron. 

In short, Chevron’s basic premises represent a reasonable judicial response to the government that we actually have and the world in which we actually live. To paraphrase Winston Churchill, Chevron is the worst standard of review, except for all the others.475 

For an excellent discussion of the Article, see Adrian Vermeule, Chevron as a Legal Framework, Jotwell (Oct. 24, 2017), here.  [Note that Vermeule lists Hickman first, but the article lists Bednar first; Hickman is the more recognized scholar]

Distinguishing Legislative History from Statutory History (11/15/17)

In my Federal Tax Procedure - (2017 Practitioners Ed. ), here, p. 7 n. 22, I state:

Legislative history is different from statutory history, which is “the formal changes in the [statute] made by the legislature when it enacts new laws and amends them over time.” William N. Eskridge, Jr., Interpreting Law: A Primer on How to Read Statutes and the Constitution 204 (Foundation Press 2016).

I think that many do not distinguish between the two and use the terms interchangeably.  But as noted, they are really two different concepts. 

I thought that fans of this subject might enjoy the following blog: Jonathan H. Adler, Justice Sotomayor looks at ‘statutory history,’ not ‘legislative history’ (The Volokh Conspiracy 11/14/17), here.

I do not discuss this distinction in the Student Edition but users of the Student Edition may also want to note the distinction.  I will likely lift the distinction from the footnote to the text in the next Editions so that it will appear in both Editions.

New Cumulative Supplement to Federal Tax Procedure Book (10/28/17)

I provide a new cumulative supplement to the Federal Tax Procedure Book.  The cumulative supplement, dated 10/28/17, may be downloaded on the Page to the right titled Federal Tax Procedure Book & Supplements, here.

As always with my publications, I encourage readers to advise me of any matters that need corrections, additions, deletions, etc.