Judges: KROUPA
Attorneys: Raymond Cohen, Pro se. Jonathan D. Tepper , for respondent.
Filed: Oct. 09, 2012
Latest Update: Nov. 21, 2020
Summary: RAYMOND COHEN, PETITIONER v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT Docket No. 26925–11W. Filed October 9, 2012. R denied P’s whistleblower award claim under I.R.C. sec. 7623(b). P concedes that information he provided R has not led to R instituting an action or collecting proceeds. P filed a petition requesting that we order R to reopen his award claim. R moved to dismiss for failure to state a claim. Held: I.R.C. sec. 7623(b) does not authorize P’s requested relief. Held, fur- ther, P di
Summary: RAYMOND COHEN, PETITIONER v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT Docket No. 26925–11W. Filed October 9, 2012. R denied P’s whistleblower award claim under I.R.C. sec. 7623(b). P concedes that information he provided R has not led to R instituting an action or collecting proceeds. P filed a petition requesting that we order R to reopen his award claim. R moved to dismiss for failure to state a claim. Held: I.R.C. sec. 7623(b) does not authorize P’s requested relief. Held, fur- ther, P did..
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RAYMOND COHEN, PETITIONER v. COMMISSIONER OF
INTERNAL REVENUE, RESPONDENT
Docket No. 26925–11W. Filed October 9, 2012.
R denied P’s whistleblower award claim under I.R.C. sec.
7623(b). P concedes that information he provided R has not
led to R instituting an action or collecting proceeds. P filed a
petition requesting that we order R to reopen his award claim.
R moved to dismiss for failure to state a claim. Held: I.R.C.
sec. 7623(b) does not authorize P’s requested relief. Held, fur-
ther, P did not state a claim upon which relief can be granted.
Raymond Cohen, pro se.
Jonathan D. Tepper, for respondent.
OPINION
KROUPA, Judge: This case is before the Court on respond-
ent’s motion to dismiss for failure to state a claim under Rule
401 and petitioner’s motion for summary judgment under
Rule 121. This case stems from a whistleblower claim under
section 7623(b). Petitioner challenges respondent’s decision
not to pursue whistleblower information he provided. Peti-
tioner alleges respondent denied his claim for an award with-
out instituting an administrative or judicial action or col-
1 All Rule references are to the Tax Court Rules of Practice and Procedure, and all section
references are to the Internal Revenue Code, unless otherwise indicated.
299
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300 139 UNITED STATES TAX COURT REPORTS (299)
lecting any proceeds. We must decide whether we may order
respondent to reopen petitioner’s whistleblower claim under
section 7623(b). We hold that no relief is available. We shall
dismiss the petition and deny as moot petitioner’s motion for
summary judgment.
Background
We summarize the factual background and procedural his-
tory to rule on the instant motions. Petitioner’s allegations
are assumed solely for the purpose of deciding the motions. 2
Petitioner resided in New Jersey when he filed the petition.
Petitioner acts pro se in this matter.
Petitioner is a certified public accountant. Petitioner pro-
vided respondent whistleblower information that petitioner
believed to be actionable.
Specifically, petitioner learned of alleged tax law violations
when his wife served as an executrix for an estate. The
estate held uncashed stock dividend checks issued by a
public corporation (taxpayer). 3 Petitioner’s wife requested
the taxpayer honor those checks and pay all unpaid divi-
dends. The taxpayer would not release dividends without
petitioner’s wife presenting an original check issued within
the last 10 years.
Petitioner suspected that the taxpayer customarily
retained possession of unclaimed proceeds resulting from
uncashed dividend checks and unredeemed bonds (unclaimed
assets). In 2009 petitioner requested information from the
State comptroller under that State’s Freedom of Information
Law (FOIL). The comptroller provided petitioner the amount
of uncashed dividends that the taxpayer had reported for cer-
tain stocks. The taxpayer had not reported any uncashed
dividends for those stocks from 2005 to 2008.
Petitioner also reviewed allegations in pleadings from a
civil proceeding against the taxpayer. See generally Frankel
v. Cole, No. 06–cv–439, 2007 WL 2683673 (E.D.N.Y. Sept. 7,
2007). Petitioner asserts that the allegations in that civil
2 We note that petitioner advanced factual allegations in the petition, the amended petition,
and the pleadings associated with the instant motions. We construe all allegations in the light
most favorable to petitioner. See, e.g., Ballantine v. Commissioner, 74 T.C. 516, 522–523 (1980).
3 We refrain from using information identifying the alleged taxpayer to whom the claim re-
lates. See Rule 345(b).
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(299) COHEN v. COMMISSIONER 301
case corroborate his allegation that the taxpayer possesses
unclaimed assets worth more than $700 million.
Petitioner alleged that the taxpayer was obligated by law
to turn over the unclaimed assets to the State. Petitioner fur-
ther alleged that the unclaimed assets the taxpayer retained
constituted unreported income for Federal tax purposes.
Petitioner submitted his allegations to respondent on Form
211, Application for Award for Original Information (claim).
Respondent notified petitioner that the matter had been
assigned to his Whistleblower Office in Ogden, Utah. The
Whistleblower Office evaluated the claim to determine
whether an investigation was warranted and an award was
appropriate. A few weeks later the Whistleblower Office
informed petitioner he was not eligible for an award because
no proceeds were collected. Petitioner requested the Whistle-
blower Office to reconsider the claim. The Whistleblower
Office reiterated the denial, noting that the claim was based
on publicly available information.
Petitioner filed a petition and an amended petition in this
Court. Petitioner requests that the Court order respondent to
reopen the claim. Respondent moved to dismiss for failure to
state a claim upon which relief can be granted. Petitioner
opposed the motion and filed a motion for summary judg-
ment.
Discussion
This case presents an issue of first impression in this
Court. We are asked to decide whether any relief is available
under section 7623(b) when a taxpayer alleges that the
Commissioner denied a claim without initiating an adminis-
trative or judicial action or collecting proceeds. Petitioner
contends that respondent abused his discretion by not acting
on his information. Petitioner argues respondent must
explain the reason he denied the claim and reopen the claim.
Respondent contends we can provide relief under section
7623(b) only after the Commissioner initiates an administra-
tive or judicial action and collects proceeds.
I. Standard of Review
We begin with the standard of review for a motion to dis-
miss for failure to state a claim. A petition should be simple,
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302 139 UNITED STATES TAX COURT REPORTS (299)
concise and direct. Rule 31(b). A whistleblower petition must
provide the basis on which the taxpayer disagrees with the
determination, supporting facts and a prayer setting forth
the relief sought. Rule 341(b)(3)–(5). We construe all
pleadings to do substantial justice. Rule 31(d). We may dis-
miss a petition for failure to state a claim upon which relief
can be granted. Rule 40. Dismissal for failure to state a claim
is appropriate where, even if all of the allegations contained
in a pleading are true, a claim fails as a matter of law. See
Phillips v. County of Allegheny, 515 F.3d 224, 233 (3d Cir.
2008).
II. Whistleblower Award Determination Review
We now consider the relief available under section 7623.
We may exercise our jurisdiction only to the extent author-
ized by Congress. Kasper v. Commissioner, 137 T.C. 37, 40
(2011). In a whistleblower action, we have jurisdiction only
with respect to the Commissioner’s award determination.
Sec. 7623; Cooper v. Commissioner, 135 T.C. 70, 75–76 (2010)
(Cooper I).
Generally, an individual who provides information that
leads the Commissioner to proceed with an administrative or
judicial action shall receive an award equal to a percentage
of the collected proceeds. See sec. 7623(b)(1). A whistleblower
award depends upon the Commissioner commencing an
administrative or judicial action and collecting proceeds. See
Whistleblower 14106–10W v. Commissioner, 137 T.C. 183,
189 (2011). Our jurisdiction under section 7623(b) does not
contemplate that we review the Commissioner’s determina-
tions of the alleged tax liability to which the claim pertains.
See Cooper v. Commissioner, 136 T.C. 597, 600 (2011)
(Cooper II). Nor does section 7623 confer authority to direct
the Commissioner to commence an administrative or judicial
action. Id.
Respondent contends we should dismiss the petition
because petitioner has not alleged any claim for relief avail-
able under section 7623(b). We agree. We are mindful that
we should construe the petition so as to do justice. Petitioner
disagrees with respondent’s decision not to act on his
information. Petitioner acknowledges, however, that the
claim did not lead to the Commissioner commencing an
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(299) COHEN v. COMMISSIONER 303
action against, or collecting any proceeds from, the taxpayer.
Petitioner has not alleged that he met the requirements to
be eligible for any relief under section 7623(b).
III. Petitioner’s Arguments
We now address petitioner’s arguments that he should
nevertheless be granted relief. Petitioner is concerned that
respondent will collect proceeds from the taxpayer after
denying the claim. He would therefore be precluded from an
award despite providing actionable information.
First, petitioner argues that he is entitled to relief because
respondent did not comply with the Administrative Proce-
dure Act (APA). See 5 U.S.C. secs. 551–559, 701–706 (2006).
The APA, however, does not create a right of action or expand
our jurisdiction. See Anonymous v. Commissioner, 134 T.C.
13, 19 (2010). We can provide relief under section 7623(b)
only after the Commissioner has initiated an administrative
or judicial action and collected proceeds. Petitioner has not
alleged the section 7623(b) threshold requirements have been
met. 4
Second, petitioner contends that he is entitled to a legal
and factual explanation of respondent’s denial of the claim.
See Cooper v. Commissioner, 136 T.C. at 601. In Cooper II,
we noted that the Commissioner had produced through the
course of litigation a memorandum explaining why the
whistleblower claim had been denied. Id. We did not hold
that the Commissioner was obligated under section 7623 to
detail his legal and factual reasons for not pursuing a claim.
There is no relief available before the prerequisites of section
7623(b) are satisfied.
Third, he argues that he is entitled to relief on equitable
grounds. This Court, however, is not a court of equity and
section 7623 does not provide for equitable relief. See
4 Petitioner contends the respondent’s decision was arbitrary and capricious. See 5 U.S.C. sec.
706(2)(A) (2006). Petitioner argues that respondent’s stated reason for denying the claim was
inconsistent with his procedures. The Commissioner will not process an award claim if the infor-
mation provided did not identify a Federal tax issue upon which the Commissioner took action,
result in the detection of an underpayment of tax or result in the collection of proceeds. Internal
Revenue Manual pt. 25.2.2.5(2) (June 18, 2010). The Whistleblower Office stated in the first de-
nial letter that the information did not lead to the collection of proceeds. Respondent may refuse
to process an award claim for this reason. See id. Petitioner also contends respondent incorrectly
concluded that petitioner relied on publicly available information. Petitioner alleges, however,
that he relied on pleadings from a civil proceeding and information provided through a FOIL
request. Both sources are public information.
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304 139 UNITED STATES TAX COURT REPORTS (299)
Commissioner v. McCoy, 484 U.S. 3, 7 (1987); Stovall v.
Commissioner, 101 T.C. 140, 149–150 (1993). Section 7623(b)
does not provide any relief before whistleblower information
leads to an administrative or judicial action and the collec-
tion of proceeds.
IV. Conclusion
In toto, section 7623(b)(4) authorizes our review of any
award determination. Petitioner seeks relief that is unavail-
able because respondent never instituted an action or col-
lected any proceeds. We can appreciate petitioner’s frustra-
tion that information that he believes is actionable was not
pursued. Congress, however, has charged the Commissioner
with resolving these claims and has not provided any rem-
edies until after an administrative or judicial action and the
collection of proceeds. For that reason, we will grant respond-
ent’s motion to dismiss for failure to state a claim. We will
also deny as moot petitioner’s motion for summary judgment.
To reflect the foregoing,
An appropriate order and order of dis-
missal will be entered.
f
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