D.C. Circuit Holds Tax Court Has No Jurisdiction To Consider WBO Action in Declining To Consider A WB Claim By Not Forwarding for Examination (1/12/22)

In Li v. Commissioner, ___ F.4th ___, 2022 U.S. App. LEXIS 2022 U.S. App. LEXIS 697 (D.C. Cir. 1/11/22), DCCir here and GS here, the Court held that the Tax Court has no jurisdiction to review under § 7623(b)(4) the IRS Whistleblower Office (“WBO”) determination that the whistleblower (“WB”) has not submitted sufficient specific information for the WBO to refer the matter to an Examination function for possible action (an audit) that might result in a WB award.  The Court of Appeals raised the issue on its own motion as it is entitled to do for lack of jurisdiction.  The Court of Appeals’ jurisdiction is dependent upon the Tax Court having had jurisdiction.

The opinion is short, so I refer readers to the opinion if they want more than the opinion I offer.

In making the holding, the Court specifically rejected contrary holdings in Cooper v. Commissioner, 135 T.C. 70, 75 (2010) and Lacey v. Commissioner, 153 T.C. 146 (2019) which held that the Tax Court had jurisdiction over WB claims that were not forwarded to the Examination function.  Note that, since appeals in WB cases must go to the D.C. Circuit, this opinion will be conclusive unless reversed by the panel, the D.C. Circuit en banc, or the Supreme Court.

The Court recognizes a potential exception to its holding in fn. 2 on p. 7:

   n2 Li does not argue on appeal that the IRS, in fact, did proceed against the target taxpayer based on information in her Form 211 application. So we need not and do not decide whether the Tax Court would have jurisdiction to hear a whistleblower’s claim in a case in which the IRS wrongly denied a Form 211 application but nevertheless proceeded against a target taxpayer based on the provided information.