KROUPA,
The following background is drawn from the petition and respondent's motion to dismiss for lack of subject matter jurisdiction and responses filed by both parties. We note that the background is stated solely for purposes of ruling on the pending motion to dismiss and2014 Tax Ct. Memo LEXIS 107">*108 is not a finding of facts.
Petitioner is a whistleblower that reported a tax fraud scheme to the Government. During the whistleblower's employment, the whistleblower learned of a tax structure involving the whistleblower's employer and several related entities and subsidiary companies (targets). When the whistleblower raised concerns over the tax structure to the whistleblower's employer, the whistleblower's employer used physical force and armed men to intimidate the *108 whistleblower and prevent disclosure. Additionally, the employer removed almost all documents and records from the whistleblower's office. The whistleblower, however, kept comprehensive backups of all office records.
In October 2006 the whistleblower met with Internal Revenue Service (IRS) and Department of Justice (DOJ) representatives and provided them with information about the targets' failure to pay tax and other conduct. Subsequently, the whistleblower again met with the DOJ representatives and discussed the targets' potential terrorist financing activity. A grand jury investigation was convened on the basis of the whistleblower's information.42014 Tax Ct. Memo LEXIS 107">*109
The whistleblower continued to provide additional information regarding the targets' activities and was in regular contact with the IRS and the DOJ representatives after December 20, 2006. The IRS and the DOJ representatives repeatedly contacted the whistleblower seeking additional information and analysis regarding the targets' transactions. On each occasion, the whistleblower provided the requested information and analysis. In 2007 the whistleblower testified before a grand jury on the basis of information the whistleblower acquired *109 after December 20, 2006.5 The whistleblower provided information to the IRS and the DOJ representatives continually until July 2009.62014 Tax Ct. Memo LEXIS 107">*110 Notably, the whistleblower's assistance in this investigation jeopardized the safety of the whistleblower and the whistleblower's family. As discussed in detail in
The whistleblower filed a Form 211, Application for Award for Original Information in 2011 and submitted to the IRS Whistleblower Office (Whistleblower Office) documentary evidence related to the targets' actions that the whistleblower had previously disclosed. Shortly thereafter, the Government entered into a Non-Prosecution Agreement with one of the targets that led to the Government recovering more than $30 million in taxes, penalties and interest. The Whistleblower Office granted the whistleblower a discretionary award *110 determination under
The whistleblower timely filed the petition seeking review of respondent's award determination. Respondent filed a motion to dismiss for lack of jurisdiction on the ground that respondent's award determination is not subject to judicial review. Respondent argues that this Court lacks jurisdiction to review respondent's award determination2014 Tax Ct. Memo LEXIS 107">*111 because he proceeded against the targets using information the whistleblower provided before the effective date of
We must decide whether the Court has jurisdiction to review respondent's whistleblower claim award determination where the claim is based on information the whistleblower provided both before and after the enactment of TRHCA
We begin with the Tax Court's jurisdiction. The Tax Court is a court of2014 Tax Ct. Memo LEXIS 107">*112 limited jurisdiction and may exercise jurisdiction only to the extent authorized by Congress.
*112 Our Rules are silent as to deciding a motion to dismiss for lack of subject matter jurisdiction. Thus, we look to the Federal Rules of Civil Procedure.
The Secretary has long had the discretion to pay awards to persons providing information that aids in (1) detecting underpayments of tax and (2) detecting2014 Tax Ct. Memo LEXIS 107">*113 and bringing to trial and punishment persons guilty of violating the internal revenue laws.
Congress enacted TRHCA in 2006 to address perceived problems with the discretionary award regime. TRHCA
*114 TRHCA also directed the Secretary to issue guidance for the operation of a Whistleblower Office administered by the IRS.12 TRHCA
The Commissioner released guidance to taxpayers on filing nondiscretionary whistleblower award claims in early 2008.
We must now decide whether the Court has jurisdiction to review respondent's award determination. Respondent argues that this Court does not have jurisdiction to review his award determination because the whistleblower provided the information to the Whistleblower Office before the enactment of
We hold that the whistleblower satisfied the whistleblower's pleading burden by alleging facts that respondent proceeded with an action against the2014 Tax Ct. Memo LEXIS 107">*117 targets using information brought to respondent's attention by the whistleblower both before and after December 20, 2006. This is consistent with TRHCA's intent to provide whistleblowers with judicial review of award determinations. We now turn to the governing law.
A whistleblower who satisfies the requirements of
Additionally, the Tax Court has exclusive2014 Tax Ct. Memo LEXIS 107">*118 jurisdiction over appeals of award determinations where a whistleblower provided information both before and after the effective date of TRHCA.
The parties dispute whether respondent proceeded against the targets using the whistleblower's post-December 20, 2006, information. The whistleblower's allegations are sufficient to establish jurisdiction. The whistleblower alleged that the whistleblower provided the IRS and the DOJ with information from at least October 2006 through July 2009. The post-December 2006 information was not simply confirmatory details. Rather, the whistleblower provided the IRS and the DOJ with the facts that formed the basis and gravamen of respondent's action against the targets. The whistleblower alleged that the whistleblower provided the *119 IRS and the DOJ with the identity of documents, wire transfers, disbursement authorizations, individuals and entities involved in the transactions.
Taking the contested factual allegations in the petition as true, they establish that from October 2006 through July 2009 the whistleblower was in constant contact with the2014 Tax Ct. Memo LEXIS 107">*120 IRS and the DOJ and provided them with the basis of and details on the targets' tax avoidance scheme. Whether respondent used this information to proceed against the targets is not a question for the present motion. The whistleblower has alleged sufficient jurisdictional facts to avail the whistleblower of
We hold, consistent with the rationale of
*120 We have considered all remaining arguments the parties made and, to the extent not addressed, we conclude they are irrelevant, moot or meritless.
For the foregoing reasons, we shall deny respondent's motion to dismiss.
1. This Court previously granted the whistleblower's motion to proceed anonymously and sealed the record in this case.↩
2. Tax Relief and Health Care Act of 2006,
3. All section references are to the Internal Revenue Code in effect at all relevant times, and all Rule references are to the Tax Court Rules of Practice and Procedure, unless otherwise indicated. All amounts are rounded to the nearest dollar.↩
4. The whistleblower's information was supplemented with information from another whistleblower.
5. The whistleblower's testimony included the identity of documents, wire transfers, disbursement authorizations, individuals and entities involved in the transactions.↩
6. The whistleblower also compiled and turned over to the IRS specific information regarding the targets' conduct and documentary evidence on the transactions and entities involved. In January 2008 the whistleblower sent the IRS a detailed list of the entities involved in the tax evasion scheme. This information was previously unknown to the IRS.
7. As discussed
8. The amendments enacting
9. Codified, in part, at
10. We decided this issue in
11. The award is reduced in certain circumstances. For example, the award is reduced where the whistleblower planned or initiated the actions that led to the underpayment of tax.
12. The 2006 legislation also requires the Secretary to provide an annual report to Congress on whistleblower claims filed and awards issued under
13. Internal Revenue Manual pt. 25.2.2 (Dec. 30, 2008) was updated on June 18, 2010, to provide additional guidance for evaluating a whistleblower claim.
14. The Commissioner's proposed regulations explain that the term "proceeds" includes when "the IRS initiates a new action that it would not have initiated, expands the scope of an ongoing action that it would not have expanded, or continues to pursue an ongoing action that it would not have continued but for the information provided."