Kasper v. Comm'r of Internal Revenue
| Decision Date | 12 July 2011 |
| Docket Number | No. 13399–10W.,13399–10W. |
| Citation | 137 T.C. No. 4,137 T.C. 37 |
| Parties | Kenneth William KASPER, Petitioner v. COMMISSIONER of INTERNAL REVENUE, Respondent. |
| Court | U.S. Tax Court |
OPINION TEXT STARTS HERE
On Jan. 29, 2009, P filed with R a claim for a whistleblower award under sec. 7623(b)(4), I.R.C., implicating a public corporation and its CEO. R bifurcated P's whistleblower claim into a claim for the corporation and another for its CEO. On June 19, 2009, R purportedly issued a letter for each claim, denying both on the basis that P did not meet the appropriate criteria for an award under sec. 7623(b), I.R.C.
On May 3, 2010, P contacted R about the status of his whistleblower claim. His letter referenced only the claim implicating the CEO. On May 24, 2010, R responded by sending P a copy of the denial letter pertaining to the claim as to the CEO. On June 14, 2010, P filed a petition with this Court seeking review of R's denial of the whistleblower claim as to the CEO.
R filed a motion to dismiss this case for lack of jurisdiction on two grounds: First, that no determination under sec. 7623(b), I.R.C., was made; and, second, if we find that a determination was made, that P failed to petition this Court within 30 days as required by sec. 7623(b)(4), I.R.C.
P argues that he did not receive a determination pursuant to sec. 7623(b)(4), I.R.C., with respect to the corporate claim. Further, P argues that he did not receive a determination with respect to the claim implicating the CEO until May 24, 2010. Because he filed his petition on June 14, 2010, he argues that he has met the 30–day requirement of sec. 7623(b)(4), I.R.C., giving this Court jurisdiction as to the claim implicating the CEO.
Held: In accordance with our decision in Cooper v. Commissioner, 135 T.C. 70, 2010 WL 2697125 (2010), each Whistleblower Office letter that denies a whistleblower claim is a determination within the meaning of sec. 7623(b)(4), I.R.C.
Held, further: R must prove by direct evidence the date and fact of mailing of the determination to the whistleblower. Magazine v. Commissioner, 89 T.C. 321, 326, 1987 WL 43890 (1987).
Held, further: The 30–day period of sec. 7623(b)(4), I.R.C., within which a whistleblower must file a petition in response to a Whistleblower Office determination, begins on the date of mailing of the determination by the Whistleblower Office.
Held, further: P filed his petition with this Court within the 30–day period specified by sec. 7623(b)(4), I.R.C., and we shall deny R's motion to dismiss for lack of jurisdiction.
Kenneth William Kasper, pro se.
John T. Kirsch, for respondent.
This case is before the Court on respondent's motion to dismiss for lack of jurisdiction. The two issues before us are: (1) Whether a letter denying petitioner's whistleblower claim constitutes a “determination” within the meaning of section 7623(b)(4); 1 and (2) if it does, whether petitioner filed a petition with this Court “within 30 days of such determination” to establish subject matter jurisdiction.
Petitioner resided in Arizona at the time he filed his petition.
On January 29, 2009, petitioner filed a Form 211, Application for Award for Original Information (whistleblower claim), with respondent's Whistleblower Office (Whistleblower Office). Petitioner's whistleblower claim provided information alleging that a public corporation and its CEO failed to pay required overtime and failed to withhold employment taxes with respect to that overtime.
The Whistleblower Office bifurcated petitioner's whistleblower claim into a claim for the corporation (the corporate claim) and one for the CEO (the CEO claim) and assigned each a separate claim number. On April 10, 2009, the Whistleblower Office sent petitioner a separate letter for each claim which informed him that the claims were being evaluated to determine whether an investigation was warranted and a reward was appropriate.
On June 19, 2009, the Whistleblower Office denied both claims. A denial letter was prepared for each claim. Each denial letter explained that the Whistleblower Office had reviewed and evaluated petitioner's claim and determined that the information he provided did not meet the appropriate criteria for an award. The denial letters also stated that Federal disclosure and other prevailing laws prevented the Whistleblower Office from providing a specific explanation for the denials. Consequently, the denial letters recited a boilerplate list of common reasons for not allowing an award, including: (1) The application provided insufficient information; (2) the information provided did not result in the recovery of taxes, penalties, or fines; or (3) the Internal Revenue Service (IRS) already had the information provided or such information was available in public records.
The only direct evidence of the date when petitioner was notified of the denial of his whistleblower claim was a letter sent by the Whistleblower Office in response to an inquiry by petitioner. On May 3, 2010, petitioner notified the Whistleblower Office that the public corporation implicated had made a settlement payment to the IRS. In the May 3 letter, petitioner asked when he could expect notification that the information he provided met the appropriate criteria for an award. Petitioner's letter referenced the claim number assigned to the CEO claim, not to the corporate claim. On May 24, 2010, the Whistleblower Office responded by sending petitioner a copy of the denial letter dated June 19, 2009, for the CEO claim. A copy of the denial letter for the corporate claim was not provided. On June 14, 2010, petitioner filed his petition for a whistleblower action with this Court pursuant to section 7623(b)(4) seeking review of respondent's denial of the whistleblower claim as to the CEO.
During the time relevant to this case, the standard practice within the Whistleblower Office was to prepare a denial letter and scan it into e-Trak, the Whistleblower Office's computer database.2 Thereafter, history notes were written or typed, dated, and then entered into e-Trak as an investigation history report. A copy of the denial letter was placed in a paper file.
Standard mailing procedures for denial letters required that the original denial letter be placed by a clerk in an envelope addressed to the whistleblower claimant at his or her last known address and deposited in the Whistleblower Office's outgoing mail. At the end of each day, a clerk took the outgoing mail to the facilities mailroom, where mail was picked up daily for delivery by the U.S. Postal Service. None of the letters were sent by certified or registered mail, and a mailing log was not kept.
The e-Trak system and the investigation history reports indicate that the Whistleblower Office's standard procedures were followed in petitioner's case. 3 Moreover, the denial letters were addressed to petitioner at his last known address and were not returned to the Whistleblower Office by the U.S. Postal Service as undeliverable.
We are asked to decide: (1) Whether a letter denying petitioner's whistleblower claim constitutes a “determination” within the meaning of section 7623(b)(4); and (2) if it does, whether petitioner filed a petition with this Court “within 30 days of such determination” pursuant to section 7623(b)(4) to give this Court subject-matter jurisdiction.
The Tax Court is a court of limited jurisdiction and may exercise its jurisdiction only to the extent authorized by Congress. Judge v. Commissioner, 88 T.C. 1175, 1180–1181, 1987 WL 49322 (1987); Naftel v. Commissioner, 85 T.C. 527, 529, 1985 WL 15396 (1985). The Tax Court is without authority to enlarge upon that statutory grant. See Phillips Petroleum Co. v. Commissioner, 92 T.C. 885, 888, 1989 WL 43931 (1989). We nevertheless have jurisdiction to determine whether we have jurisdiction. Hambrick v. Commissioner, 118 T.C. 348, 2002 WL 655426 (2002); Pyo v. Commissioner, 83 T.C. 626, 632, 1984 WL 15623 (1984); Kluger v. Commissioner, 83 T.C. 309, 314, 1984 WL 15610 (1984).
Congress enacted section 7623(b)(4) as part of the Tax Relief and Health Care Act of 2006, Pub.L. 109–432, div. A, sec. 406, 120 Stat. 2958 (effective Dec. 20, 2006). Section 7623(b)(4) provides:
(4) Appeal of award determination.—Any determination regarding an award under paragraph (1), (2), or (3) may, within 30 days of such determination, be appealed to the Tax Court (and the Tax Court shall have jurisdiction with respect to such matter).
Section 7623(b)(4) clearly provides that: (1) The whistleblower claimant has a right to appeal any determination made by the Whistleblower Office; (2) he or she must appeal within a 30–day period; and (3) the Tax Court has jurisdiction to hear the appeal. The jurisdiction of the Court is dependent upon a finding that a determination has been made and a finding that the appeal from the determination is timely. However, the statute does not clearly define the term “determination” or the date on which the 30–day period begins.
Respondent argues that there has been no determination with respect to either of petitioner's claims because the information provided was not used to detect underpayments of tax or to collect proceeds. Respondent argues that there can be a determination on which an appeal to the Tax Court can be based only if the Whistleblower Office undertakes an administrative or judicial action and thereafter determines to make an award.
We recently decided this issue in Cooper v. Commissioner, 135 T.C. 70, 2010 WL 2697125 (2010). Faced with identical arguments from the Commissioner in Cooper, we held that a letter rejecting a whistleblower claim constitutes a determination within the meaning of section 7623(b)(4) because it is a final administrative decision. We see no reason not to follow our holding in Cooper. Here the denial letter from the Whistleblower Office states that petitioner is not entitled to an award. It is a final...
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