In Cohen v. Commissioner, 139 T.C. No. 12 (October 9, 2012), the Tax Court decided that it lacked jurisdiction to review an IRS Whistleblower Office decision not to pursue a claim.
In the decision, Mr. Cohen asked the Tax Court to force the IRS to proceed with his claim. The IRS’ position was that the Tax Court only had authority to review a whistleblower determination after the IRS had acted upon the claim and obtained proceeds, and therefore lacked any authority to compel it to act.
The Tax Court found that it did not have jurisdiction to compel the IRS to explain its reasons for not proceeding with Mr. Cohen’s claim and that Section 7623(b) required both a judicial or administrative action by the IRS and proceeds before Tax Court review could be obtained.
The current state of the law appears to be that pursuant to IRC Section 7623(b)(4) and Cooper I, a whistleblower must appeal any determination to the Tax Court within 30 days for the Tax Court to have any jurisdiction. Unless there is an administrative or judicial action and resulting proceeds, however, the IRS will prevail on a motion to dismiss (if the taxpayer does not allege the occurrence of those elements, as in Cohen) or summary judgment (as in Whistleblower 14106-10W.) The Whistleblower may learn the reason(s) the IRS is not pursuing the claim during the course of litigation, but the Tax Court will not compel the IRS to explain itself.
Second, the IRS can determine whether to pursue a matter or not, and no matter how promising the claim appears to be, a whistleblower cannot compel the IRS to act. The IRS can decline to move forward on potential action for a number of reasons, all of which at this point appear to be beyond Tax Court review.
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