Whistleblower 21276-13W v. Comm'r
| Decision Date | 26 August 2020 |
| Docket Number | Docket No. 21276-13W,Docket No. 21277-13W.,155 T.C. No. 2 |
| Parties | WHISTLEBLOWER 21276-13W, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent WHISTLEBLOWER 21277-13W, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent |
| Court | U.S. Tax Court |
Ps' claims for whistleblower awards have been the subject of two prior Opinions. Whistleblower 21276-13W v. Commissioner, 144 T.C. 290 (2015), supplemented by Whistleblower 21276-13W v. Commissioner, 147 T.C. 121 (2016).
After the Court issued its first Opinion, Ps and R entered into a partial settlement that provided for immediate payment with respect to portions of the awards due to Ps and left for judicial resolution a single issue on which the parties could not agree. The partial settlement, which was referred to (but not made part of the record) in the prior proceedings, provided that any further payment "will be reduced by the sequester reduction percentage in effect at the time of payment."
The Court's second Opinion sided with Ps on the remaining unagreed issue. The Court then entered two decisions (the "Decisions") setting forth the dollar amounts of Ps' awards calculated based on inputs stipulated by the parties. The Decisions reflected the gross amounts of the awards, including the awards that R had paid to Ps after the issuance of the first Opinion pursuant to the partial settlement.
R filed an appeal challenging the holding of the second Opinion, but eventually the appeal was dismissed based on the parties' joint stipulation for dismissal. Thereafter, R paid the remaining awards to Ps, but reduced the payments to take into account the sequester reductions contemplated by the parties' partial settlement as well as withholding taxes.
More than eight months after the remaining payments were made and more than seven months after the Decisions became final, Ps moved the Court to enforce the Decisions and to require R to pay the amounts set forth in the Decisions without the sequester reductions.
Held: The Court had jurisdiction to enter the Decisions because a remand to the IRS Whistleblower Office for further proceedings would have been futile as only one disposition was possible as a matter of law on the issue before the Court.
Held, further, as a court of record, the Court has jurisdiction to enforce the Decisions under longstanding Supreme Court precedent.
Held, further, Ps are not entitled to the relief they request, and the motions will be denied because they ignore the terms of the partial settlement and misinterpret the Decisions.
Dean A. Zerbe, for petitioners.
Richard L. Hatfield, for respondent.
TORO, Judge: These cases are before us on the whistleblowers' motions (the "Motions") to enforce our previously entered decisions. Those decisions set forth the dollar amounts of the awards calculated for Whistleblower 21276-13W and Whistleblower 21277-13W, pursuant to our August 3, 2016, Opinion. Whistleblower 21276-13W v. Commissioner, 147 T.C. 121, 140 (2016), supplementing 144 T.C. 290 (2015). The whistleblowers ask us to require the Commissioner to pay the amounts set forth in those decisions, rather than smaller amounts diminished by "sequester reductions." The Commissioner replies that he has paid in full the awards to which the whistleblowers are entitled: the amounts specified in the decisions less the sequester reductions to which the parties agreed. For the reasons that follow, we will deny the Motions.
Background
Our two previous Opinions in these cases describe more fully the relevant factual and legal background that gave rise to the present dispute, and we will not repeat that discussion here. Our focus here is on the facts relevant to deciding the Motions.
In our first Opinion, issued in June 2015, we were asked to consider whether the whistleblowers, who had not approached the Whistleblower Office until after the Government had collected approximately $74 million from a targeted business pursuant to a plea agreement, but who asserted that they had contributed to the Government's recovery, could be eligible for a whistleblower award. We held that they could be and instructed the Commissioner to consider the merits of their claims. Whistleblower 21276-13W v. Commissioner, 144 T.C. at 300, 306. After we issued that Opinion, the Court "issued an order requiring the parties to attempt to resolve their differences and to keep the Court informed of their progress." Whistleblower 21276-13W v. Commissioner, 147 T.C. at 122. Discussions followed, and the parties reached a partial settlement in November 2015. There they agreed that the whistleblowers were eligible for a total award of 24% of collected proceeds, but they could not agree whether certain amounts were "collected proceeds" for purposes of determining the amount of the award. The parties also agreed that any award would be reduced by a sequester reduction percentage.1
The partial settlement stated, in relevant part:
The parties did not enter this partial settlement into the record until the whistleblowers filed the Motions. Instead, they "informed the Court that: (1) they agree that petitioners are eligible for an award; and (2) the award is to be 24% of the collected proceeds, i.e., proceeds that are eligible for an award; but (3) they could not reach agreement as to the amount of the collected proceeds." Whistleblower 21276-13W v. Commissioner, 147 T.C. at 122. Subsequent submissions to the Court referred to the settlement without attaching the parties' agreement.
On August 3, 2016, we issued our second Opinion, holding that the disputed $54 million should have been included in collected proceeds for purposes of an award under section 7623(b).3 Whistleblower 21276-13W v. Commissioner, 147 T.C. at 138-140. We concluded our Opinion by calculating the amounts of the whistleblowers' awards and treating as collected proceeds the entire $74 million stipulated by the parties.
We entered a decision in docket No. 21276-13W on January 27, 2017, which stated:
We entered an equivalent decision in docket No. 21277-13W on the same day, ordering and deciding "that Whistleblower 21277-13W is entitled to a whistleblower award of $8,895,803.50." (For convenience, we refer to the two decisions as the "January 2017 Decisions.")
The Commissioner appealed the January 2017 Decisions, but, on March 29, 2018, the U.S. Court of Appeals for the District of Columbia Circuit dismissed the appeal pursuant to the parties' joint stipulation for dismissal.
On May 14, 2018, the Commissioner paid the whistleblowers a combined $9,539,391.235 (in addition to the $4,473,600 previously paid). To calculate thispayment, the Commissioner multiplied the agreed amount of criminal fines and civil forfeitures ($54,131,693.42) by the agreed award percentage (24%), yielding $12,991,606.42. As provided in the partial settlement, the Commissioner reduced the award by 6.6% (i.e., by $857,446.02) to account for the sequester reduction percentage in effect at the time of the payment, yielding $12,134,160.40. He also withheld Federal income tax of $2,594,769.17, yielding the net payment of $9,539,391.23.
In January 2019, the whistleblowers filed the Motions. They argue that the January 2017 Decisions expressly state that they are entitled to a combined award of $17,791,607, or $8,895,803.50 each. They do not challenge the income tax withheld from the awards, but they "ask that the Court issue an order that Respondent pay Petitioners the sequester reduction subtracted from the payment Respondent wired to Petitioners' counsel."
The Commissioner objects to the Motions. He contends that the whistleblowers have been paid in full.
Discussion
Neither party questions our authority to reach the merits of the whistleblowers' Motions. Nevertheless, in view of the procedural posture of these cases, and particularly given that the Motions were filed long after the January 2017 Decisions became final,6 we begin by considering whether we have that authority.
As an initial matter, we note that, like all Federal courts, we are a court of limited jurisdiction. Estate of Wenner v. Commissioner, 116 T.C. 284, 286 (2001) (citing Flight Attendants Against UAL Offset v. Commissioner, 165 F.3d 572, 578 (7th Cir. 1999)). We exercise jurisdiction only...
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