UNITED STATES TAX COURT



        MICHAEL VAN BEMMELEN, Petitioner v.
    COMMISSIONER OF INTERNAL REVENUE, Respondent



Docket No. 19787-18W.                         Filed August 27, 2020.



       In 2018 P submitted to the WBO of the IRS, pursuant to I.R.C.
sec. 7623(b)(1), a Form 211, Application for Award for Original
Information, making allegations against T. P’s Form 211 referenced
an earlier 2012 submission relating to T and several other taxpayers.
P’s claim was forwarded to a classifier in the WBO and then assigned
for review to a classifier in the IRS LB&I. On the basis of the latter’s
recommendation, in 2018 the WBO rejected P’s claim for an award
because “the information provided was speculative and/or did not
provide specific or credible information regarding tax underpayments
or violations of internal revenue laws.” After P petitioned this Court,
R moved for summary judgment under Rule 121 and submitted a
certified administrative record, not including the 2012 submission. P
moved to supplement the administrative record with two items: (1)
the 2012 submission, and (2) a document reflecting a presentation
that P made to IRS Criminal Investigation Division agents in 2019
(2019 document).
                                 -2-

      Held: In order to overcome the presumption that R has
properly designated the administrative record, P must make a
substantial showing with clear evidence.

       Held, further, because P has made a substantial showing with
clear evidence that his 2012 submission is properly included in the
administrative record, P’s motion to supplement the record will be
granted insofar as it relates to the 2012 submission.

       Held, further, because P has not demonstrated that the 2019
document meets any exception for consulting extrarecord evidence,
see City of Dania Beach v. FAA, 

, 590 (D.C. Cir. 2010),
P’s motion to supplement the record will be denied insofar as it
relates to the 2019 document.

       Held, further, because the law provides that, in analyzing
information received from an individual, the WBO “in its sole
discretion, may ask for additional assistance from such individual or
any legal representative”, Tax Relief and Health Care Act of 2006,
Pub. L. No. 109-432, sec. 406(b)(1)(C), 120 Stat. at 2960, and the
statute provides no meaningful standard against which to judge the
WBO’s exercise of that discretion, the WBO’s exercise of discretion
in not asking for additional assistance from P or his attorney is
immune from judicial review.

       Held, further, the WBO Director did not improperly redelegate
his authority to analyze P’s information.

       Held, further, because the WBO’s rejection of P’s claim is
supported by the administrative record, as completed, and was not
arbitrary, capricious, an abuse of discretion, or otherwise not in
accordance with law, R’s motion for summary judgment will be
granted.
                                        -3-

      Michael Van Bemmelen, pro se.

      Nicole M. Connelly, for respondent.



                                    OPINION


      THORNTON, Judge: Petitioner initiated this action under section

7623(b)(4) seeking review of a determination by the Internal Revenue Service

(IRS) Whistleblower Office (WBO) rejecting his claim for an award.1 Pending

before the Court are (1) respondent’s motion for summary judgment, filed July 12,

2019, (2) petitioner’s motion to supplement the record, filed March 2, 2020, and

(3) petitioner’s first supplement to motion to supplement the record, filed March 2,

2020. As discussed below, we will grant in part and deny in part petitioner’s

motion to supplement the record, as supplemented, and we will grant respondent’s

motion for summary judgment.




      1
      Unless otherwise indicated, all section references are to the Internal
Revenue Code, and all Rule references are to the Tax Court Rules of Practice and
Procedure.
                                        -4-

                                     Background

      The following facts are drawn from the pleadings and motion papers,

including two declarations and the exhibits attached thereto, and the

administrative record as certified by respondent and as completed in this

proceeding.

      On March 12, 2018, Linda J. Stengle, Esq., submitted to the WBO on

petitioner’s behalf a Form 211, Application for Award for Original Information.

Ms. Stengle’s cover letter states:

      This office represents Dr. Michael Van Bemmelen [petitioner] in his
      whistleblower reward claim for a most egregious tax evasion scheme
      perpetrated by * * * [the named target taxpayer]. Through this letter,
      I am hoping to obtain the correct claim number for this potential
      corporate defendant and/or verify that the appropriate form has been
      received by the Service. An executed 211 form is enclosed should
      this not be the case.

      Dr. Van Bemmelen uncovered this complicated tax evasion scheme
      and first reported details of the scheme to the Service prior to 2012.
      Since then, Dr. Van Bemmelen supplemented his original report with
      more details to the Service, including details about other potential
      taxpayer defendants. Over time, Dr. Van Bemmelen supplemented
      his original report with more details to the service, including details
      about other potential taxpayer defendants. Over time, Dr. Van
      Bemmelen submitted additional Forms 211 to ensure that his rights to
      a potential whistleblower award for this potential taxpayer defendant
      are protected.
                                         -5-

      After first reporting the misconduct to the IRS prior to and again in
      2012 as well as 2016, Dr. Van Bemmelen also reported the scheme to
      * * * [various U.S. and State attorneys general].

      We also include Dr. Van Bemmelen’s original reports from his 2016
      submission with the form 211 with information about what has been
      reported to other government agencies about the potential taxpayer
      defendants after they were first reported to the IRS.

      Enclosed with Ms. Stengle’s March 12, 2018, letter is a Form 211, signed

by petitioner on March 5, 2018, alleging income tax violations by the target

taxpayer, a global insurance company (target). In response to the directive “Name

and title and contact information of IRS employees to whom violation was first

reported, if known” petitioner’s Form 211 states: “Written claims submitted to

IRS WO, October 2012. Verbal reports of violations to IRS beginning in 2004.”

On the Form 211, the boxes for “New submission” or “Supplemental submission”

are both left unchecked. In response to the associated directive “If a supplemental

submission, list previously assigned claim number(s)” petitioner’s Form 211

states: “See attached history of claims.”

      Also enclosed with Ms. Stengle’s March 12, 2018, letter is an undated 11-

page document captioned “FORM 211 NARRATIVE”. This document asserts

that in his capacity as a financial adviser for international investment banks,

petitioner had obtained information indicating that the target was a “co-
                                        -6-

conspirator” in a complicated tax-evasion scheme involving investments in

portfolios of life insurance policies. This document alleges that the target engaged

in “money laundering” by providing funds and facilitating bank loans to a third-

party “phantom tax exempt company, purportedly located in the U.S. Virgin

Islands” which engaged in nonexempt arbitrage activity involving life insurance

portfolios. According to this document, the third-party company and its affiliates

improperly took advantage of U.S. Virgin Islands tax incentives for exempt

activities and evaded hundreds of millions of dollars of taxes. The document also

alleges that the target had borrowed funds which were used, through the

mechanism of intercompany loans among certain of the target’s affiliates, to

purchase life insurance settlement policies on the secondary market and pay the

premiums on the purchased policies. The document alleges that the target violated

section 264(a) by deducting the interest incurred for financing secondary-market

life insurance investments, thereby evading an estimated $858,082,500 of Federal

taxes from 2001 through the third quarter of 2015.

      Also enclosed with Ms. Stengle’s March 12, 2018, letter to the WBO is an

unsigned copy of a letter to the WBO dated March 1, 2016, “Re: New Claim”.

This earlier letter, much like Ms. Stengle’s March 12, 2018, letter, indicates that

she represented petitioner in his efforts to obtain IRS whistleblower awards on the
                                         -7-

basis of his claim of tax evasion by the target. This letter, consistent with the

“FORM 211 NARRATIVE” previously described, states that petitioner estimates

the target’s unpaid Federal tax to be “approximately $858,082,500”. The letter

goes on to state that details of this purported misconduct appear in “the attached

Form 211 and Form 211 Narrative.” The copy of the March 1, 2016, letter

enclosed with Ms. Stengle’s March 12, 2018, letter does not include any attached

Form 211 or “Form 211 Narrative” apart from the Form 211 signed by petitioner

on March 5, 2018, and the undated “FORM 211 NARRATIVE” previously

described.

      On March 21, 2018, the WBO received petitioner’s Form 211 dated March

5, 2018. It was assigned claim No. 2018-006801. By letter dated April 3, 2018,

addressed to petitioner c/o Ms. Stengle’s law firm, the WBO acknowledged

receiving this claim. By a separate letter to Ms. Stengle, also dated April 3, 2018,

the WBO advised her that because she had failed to submit a valid Form 2848,

Power of Attorney and Declaration of Representative, the WBO was required to

communicate directly with petitioner about this claim.
                                        -8-

      Petitioner’s claim was forwarded to a classifier in the WBO.2 On April 12,

2018, this classifier prepared a classification checklist memorandum, indicating

petitioner’s claim as arising under “IRC 7623(a)/(b)” and noting “[a]lleged amount

in dispute is greater than $2,000,000”.3 This memorandum indicates that the

classifier: “Researched ICE [Initial Claim Evaluation] claims since WB

[whistleblower] referenced prior claims. No claims located.”4 The WBO

classifier recommended that the claim be referred to the Large Business &

International Division (LB&I) of the IRS for classification. On April 13, 2018,

petitioner’s claim was referred to LB&I for classification.

      By cover letter dated May 1, 2018, Ms. Stengle transmitted to the WBO a

Form 2848 dated April 13, 2018, authorizing her to represent petitioner with



      2
      A classifier is an IRS employee whose role is “to determine if the
information on the Form 211 warrants further review.” Internal Revenue Manual
(IRM) pt. 25.2.1.3.1(2) (May 28, 2020).
      3
       Sec. 7623(b) applies to certain whistleblower claims where the proceeds in
dispute exceed $2 million. Sec. 7623(b)(5)(B).
      4
       The Initial Claim Evaluation Unit (ICE) acts as the “primary receipt and
control function responsible for performing whistleblower claim intake,
monitoring, award processing, and responding to correspondence and telephone
inquiries from internal and external customers.” IRM pt. 1.1.26.1.3.5(1) (Jan. 11,
2018). Effective July 10, 2016, the IRS Small Business/Self-Employed Division
was assigned “operational responsibility” for ICE while the WBO retained
“procedural and policy oversight” of ICE.

regard to “Forms 211/Claim Number 2018-006801”. In a letter dated May 25,

2018, referencing claim No. 2018-006801, Ms. Stengle submitted a three-page

“supplemental narrative” that offered a “short, step-by-step summary” of the “tax

evasion scheme” purportedly perpetrated by the target. This summary reiterated

petitioner’s claims that the target had sought to evade taxes by purchasing

investments in the secondary life insurance market with borrowed funds and

improperly deducting the interest. Enclosed with this letter was a new Form 211,

signed by petitioner on May 25, 2018, which indicated that it was a “supplemental

submission” to claim No. 2018-006801. This Form 211 left many lines blank and

contained no information not found in petitioner’s March 5, 2018, Form 211.

      By letter dated July 9, 2018, referencing claim No. 2018-006801, the WBO

acknowledged receiving the correspondence dated May 25, 2018, stating: “Your

claim is still open and under active consideration.”

      On September 7, 2018, petitioner’s claim was assigned for review to

Analisa Graves, a classifier in LB&I. Ms. Graves prepared a classification

checklist memorandum which states, among other things, that petitioner had

alleged that the target had conspired “to evade millions in federal and local taxes”

and that “[t]he estimated dollar amount of the tax liability is less than $2 million.”

The memorandum classifies petitioner’s claim as arising under “IRC 7623(a)”,
                                        - 10 -

noting that “[a]llegations meet 7623(a) criteria”. In the memorandum Ms. Graves

recommends that petitioner’s claim be rejected on the basis that “[a]llegations are

not specific, credible, or are speculative--[a]llegations are purely speculative in

nature”. The memorandum also states:

      The information obtained in this claim is referenced to the claimant’s
      original claim (2012-003653). The original claim was determined to
      lack substance. The supplemental information provided in this claim
      does not have enough information to support the alleged violations.
      The claim should be rejected.

      On September 11, 2018, Ms. Graves returned petitioner’s claim to the WBO

with her recommendation. On that same date, petitioner’s claim was assigned to

Jessica Robison in ICE. She received Ms. Graves’ classification checklist

memorandum and on September 11, 2018, prepared an Award Recommendation

Memorandum (ARM), adopting the classifier’s recommendations.

      Also on September 11, 2018, respondent issued to petitioner a final

determination letter captioned “FINAL DECISION UNDER SECTION 7623(a)”.

This letter states that the WBO had considered petitioner’s Form 211 dated March

5, 2018, and had made “a final decision to reject your claim for an award.” The

letter goes on to state that petitioner’s claim had been “rejected because the

information provided was speculative and/or did not provide specific or credible

information regarding tax underpayments or violations of internal revenue laws.”
                                         - 11 -

The letter states that it “is a final determination for purposes of filing a petition

with the United States Tax Court.”

      There is no evidence that the IRS ever commenced an action against, or

collected proceeds from, the target as a result of the information petitioner

supplied.

      Petitioner timely petitioned this Court. On July 12, 2019, respondent filed a

motion for summary judgment, supported by two unsworn declarations under

penalty of perjury by Ms. Graves and Ms. Robison.

      On August 12, 2019, petitioner filed his opposition to respondent’s motion

for summary judgment filed July 12, 2019. Also on August 12, 2019, petitioner

filed a first supplement to opposition to motion for summary judgment, which

includes as an exhibit a copy of a letter, dated December 12, 2012, from Ms.

Stengle to the WBO, and an accompanying 20-page document captioned “IRS

FORM 211 ATTACHMENT” (2012 submission). Ms. Stengle’s December 12,

2012, letter references claim No. 2012-003656 and indicates that petitioner is

resubmitting additional Forms 211 as relate to certain individuals and entities but

does not reference the target.5 The attached “IRS FORM 211 ATTACHMENT”

lists 15 taxpayers (not including the target) as the subject of petitioner’s

      5
          The copy of the letter submitted by petitioner includes no Form 211.
                                        - 12 -

whistleblower claim. It describes a “continuing misuse of USVI insurance

company tax exemption” by certain named individuals and associated entities.

This document provides additional background about the alleged “money

laundering activities” as described in the “FORM 211 NARRATIVE” enclosed

with Ms. Stengle’s March 12, 2018, letter with respect to the target. The 2012

submission does not specifically allege tax evasion by the target, however, but

concludes by stating that petitioner “will provide a future supplement detailing

* * * [the target’s] role in the * * * scheme once the Relator’s [petitioner’s] legal

team concludes its analysis.”

      After additional briefing, on January 13, 2020, the Court ordered respondent

to file a report, attaching thereto the administrative record in this case as compiled

by the WBO. On February 10, 2020, respondent filed a status report, attaching

thereto a certified copy of the administrative record.

      On March 2, 2020, petitioner filed a motion to supplement the record, along

with a first supplement to motion to supplement the record, requesting that the

administrative record be supplemented with two items that are not included in the

materials that respondent certified as the administrative record: (1) the 2012

submission, and (2) a document captioned “Corporate identity fraud and claim of

U.S. Virgin Islands tax exemption”, dated September 3, 2019, which represents,
                                        - 13 -

according to petitioner’s description of it, a presentation that he made to IRS

Criminal Investigation Division agents on September 5, 2019, focusing on “the

original claim [i.e., the claim reflected in Ms. Stengle’s September 12, 2012, letter]

and the role of * * * [the target’s] affiliates in promoting and benefitting from the

fraud” (2019 submission).

      On March 13, 2020, respondent filed his response to the motion to

supplement the record, as supplemented, opposing the granting of petitioner’s

motion. On April 7, 2020, petitioner filed a reply to that response.

                                     Discussion

A. Jurisdiction

      Section 7623(a) authorizes the Secretary to pay discretionary whistleblower

awards from collected proceeds. Section 7623(b) makes whistleblower awards

mandatory if certain statutory requirements are met. One of the requirements is

that the proceeds in dispute exceed $2 million. Sec. 7623(b)(5). Section

7623(b)(4) gives the Tax Court jurisdiction over “[a]ny determination regarding an

award under paragraph (1), (2), or (3)” of subsection (b), including rejections and

denials of claims for awards. See Lacey v. Commissioner, 

, 163

(2019).
                                         - 14 -

      The final determination letter upon which this case is predicated is

captioned “FINAL DECISION UNDER SECTION 7623(a)”.6 Although it does

not expressly refer to section 7623(b), it rejects petitioner’s claim for an award and

states that this “is a final determination for purposes of filing a petition with the

United States Tax Court”, thereby implicitly acknowledging that this is a

determination under section 7623(b). We conclude that we have jurisdiction over

this case. See Lippolis v. Commissioner, 

, 396 n.2 (2014) (“Denying

a whistleblower’s claim under sec. 7623(b) without saying so does not deprive this

Court of jurisdiction.”).

B. Standard and Scope of Review

      In reviewing a determination of the WBO, we employ the standard of

review of section 706(2)(A) of the Administrative Procedure Act (APA), which

tells a reviewing court to reverse agency action that it finds “arbitrary, capricious,

      6
        As discussed infra note 15 and the associated text, this characterization of
petitioner’s claim as arising under sec. 7623(a) appears consistent with the
directives of IRM pt. 25.2.2.7.1(2) (Jan. 12, 2018), regarding the treatment of
claims that are rejected as speculative. Although we find those directives
instructive in understanding the procedures the IRS expects its employees to
follow, see Wadleigh v. Commissioner, 

, 294 n.13 (2010), the IRM
does not have the force of law, see Marks v. Commissioner, 

, 986 n.1
(D.C. Cir. 1991), aff’g T.C. Memo. 1989-575; Vallone v. Commissioner, 

, 807-808 (1987). Consequently, we do not regard those IRM directives or the
characterization of petitioner’s claim based on those directives as determinative of
our jurisdiction.
                                       - 15 -

an abuse of discretion, or otherwise not in accordance with law.” Kasper v.

Commissioner, 

, 21 (2018). We do not substitute our judgment for that

of the agency but instead confine ourselves to ensuring that its determination

“remained ‘within the bounds of reasoned decisionmaking’”. Dep’t of Commerce

v. New York, 588 U.S. ___, ___, 

, 2569 (2019) (quoting Balt. Gas

& Elec. Co. v. Nat. Res. Def. Council, Inc., 

, 105 (1983)). In the

course of our review, we cannot compel the IRS to commence an audit or to

provide an explanation of its decision not to commence an audit. See Cohen v.

Commissioner, 550 F. App’x 10, 11 (D.C. Cir. 2014), aff’g 

(2012);

Lewis v. Commissioner, 154 T.C. ___, ___ (slip op. at 22) (Apr. 8, 2020).

      In reviewing a determination of the WBO, we generally confine our review

to the administrative record. Kasper v. Commissioner, 

; see James

Madison Ltd. by Hecht v. Ludwig, 

, 1095 (D.C. Cir. 1996) (noting

that under well-settled principles of administrative law, courts ordinarily confine

their review of agency determinations to the administrative record as submitted by

the agency). The administrative record in a whistleblower case normally is

expected to include “all information provided by the whistleblower (whether

provided with the whistleblower’s original submission or through a subsequent

contact with the IRS).” Sec. 301.7623-3(e)(2)(i), Proced. & Admin. Regs. The
                                       - 16 -

information that a whistleblower provides to the IRS’ operating divisions before

submitting a Form 211 to the WBO may be relevant to the whistleblower’s claim

for an award. See Whistleblower 21276-13W v. Commissioner, 

(2015).

C. Petitioner’s Motion To Supplement the Record, as Supplemented

      Petitioner’s motion to supplement the record, as supplemented, requests that

the administrative record be “supplemented” with two items: (1) the 2012

submission and (2) the 2019 submission.

      An administrative record may be “supplemented” in one of two ways,

“either by (1) including evidence that should have been properly a part of the

administrative record but was excluded by the agency, or (2) adding extrajudicial

evidence that was not initially before the agency but the party believes should

nonetheless be included in the administrative record.” Animal Legal Def. Fund v.

Vilsack, 

, 160 (D.D.C. 2015) (quoting WildEarth Guardians v.

Salazar, 

, 5 n.4 (D.D.C. 2009)). Petitioner’s motion conflates

these two types of record “supplementation”: It requests the Court to include

certain omitted evidence in the administrative record as well as to review certain

evidence that is outside or in addition to the administrative record. As discussed

more fully below, these are separate types of requests and subject to distinct
                                       - 17 -

standards. See Oceana, Inc. v. Ross, 

, 78 (D.D.C. 2018)

(“[C]onfusion has arisen because the term ‘supplement’ ‘has been used

synonymously to refer to both a circumstance in which a party argues that the

administrative record does not actually reflect the materials that the agency had

before it when it made its decision, and a circumstance in which a party seeks to

add extra-record or extra-judicial information to the record that was concededly

not before the agency.’” (quoting Univ. of Colo. Health at Mem’l Hosp. v.

Burwell, 

, 13 (D.D.C. 2015))); see also Univ. of Colo. Health v.

Azar, ___ F. Supp. 3d ___, 

, at *5 (D.D.C. Mar. 31, 2020)

(discussing different standards that apply for the two types of record

“supplementation”); Oceana, Inc. v. Pritzker, 

, 316-317

(D.D.C. 2016), aff’d sub nom. Oceana, Inc. v. Ross, 

(D.C. Cir.

2019).

      1. Request To Include Omitted Evidence in the Administrative Record

      Petitioner requests that we include the 2012 submission in the

administrative record. He urges that the administrative record is incomplete

without the 2012 submission because information submitted with respect to the

claim on which this case is predicated was “supplemental” to his 2012 submission

and all these materials should be considered together.
                                       - 18 -

      Respondent counters that the 2012 submission is not properly included in

the administrative record because the WBO did not consider the 2012 submission

in rejecting petitioner’s claim. Respondent asserts that petitioner’s 2012

submission was associated with six different taxpayers and assigned six different

claim numbers by the WBO, which eventually denied all of these claims at various

times from 2012 to 2015.

      Absent a substantial showing made with clear evidence to the contrary, an

agency is presumed to have properly designated the administrative record. See

Oceana, Inc. v. 

(“[T]he designation of the Administrative

Record, like any established administrative procedure, is entitled to a presumption

of administrative regularity.” (quoting Bar MK Ranches v. Yuetter, 

,

740 (10th Cir. 1993))); see also Latif v. Obama, 

, 1178 (D.C. Cir.

2011) (describing the showing required to overcome the presumption of regularity

as one made by “clear evidence”); Nat. Res. Def. Council, Inc. v. Train, 

, 291 (D.C. Cir. 1975) (finding that the plaintiff had made a “substantial

showing” that the entire administrative record had not been filed with the

reviewing court). As one court has explained:

      A court should generally consider neither more nor less than what
      was before the agency at the time it made its decision. This means
      the agency must compile all the information it considered directly or
                                        - 19 -

      indirectly. However, it is the responsibility of the deciding agency to
      compile the administrative record, and the agency is presumed to
      have properly done so.

             In order for a Court to order supplementation, the plaintiff must
      overcome this strong presumption of regularity by putting forth
      concrete evidence that the documents it seeks to ‘add’ to the record
      were actually before the decisionmakers. There should be nothing
      controversial about this proposition. If for some reason, materials
      that were actually a part of the agency’s record were not properly
      included, whether by design or accident, they should be included in
      the record for the Court’s review. It is only the court’s deference to
      the agency’s compilation that counsels pause. If it can be shown that
      the materials sought to be included in the record before the court,
      were indeed before the agency, supplementation is appropriate. * * *
             [Citations omitted.]

Cape Hatteras Access Pres. All. v. U.S. Dep’t of Interior, 

, 114

(D.D.C. 2009); see also Sara Lee Corp. v. Am. Bakers Ass’n, 

, 33-

36 (D.D.C. 2008).

      The mere fact that the WBO possessed the 2012 submission at the time of

its decision does not mean that the 2012 submission should necessarily become

part of the administrative record in this case. See Butte Cty., Cal. v. Chaudhuri,

, 507 (D.C. Cir. 2018). If, however, before the WBO made its

determination petitioner brought the 2012 submission to the WBO’s attention with

respect to the claim that is the subject of the instant case, then the 2012 submission
                                       - 20 -

is properly part of the administrative record. See id.; see also sec. 301.7623-

3(e)(2)(i), Proced. & Admin. Regs

      Both the Form 211 that petitioner submitted in March 2018 and Ms.

Stengle’s cover letter referenced petitioner’s 2012 submission. Indeed, in

response to the directive “Name and title and contact information of IRS

employees to whom violation was first reported, if known” petitioner’s Form 211

states: “Written claims submitted to IRS WBO, October 2012.” Moreover, Ms.

Graves’ classification checklist memorandum , as incorporated in the ARM, states:

      The information obtained in this claim is referenced to the claimant’s
      original claim (2012-003653). The original claim was determined to
      lack substance. The supplemental information provided in this claim
      does not have enough information to support the alleged violations.

      These statements, coupled with the contents of petitioner’s Form 211,

constitute a substantial showing made with clear evidence that the 2012

submission is properly part of the administrative record. Accordingly, we will

grant petitioner’s motion to supplement the record, as supplemented, insofar as it

seeks to complete the record with the 2012 submission.

      2. Request to Permit Consideration of Extrarecord Evidence

      In asking us to supplement the administrative record to include the 2019

submission, petitioner is asking us to consider evidence that was not (and could
                                       - 21 -

not) have been before the WBO when it made its decision in 2018. Although it is

sometimes appropriate to consider extrarecord information, this “is the exception,

not the rule.” Theodore Roosevelt Conversation P’ship v. Salazar, 

,

514 (D.C. Cir. 2010). The Court of Appeals for the D.C. Circuit has “recognized a

small class of cases where district courts [or, as here, the Tax Court] may consult

extra-record evidence when ‘the procedural validity of the [agency]’s action . . .

remains in serious question’”. Hill Dermaceuticals, Inc. v. FDA, 

, 47

(D.C. Cir. 2013) (quoting Esch v. Yeutter, 

, 991 (D.C. Cir. 1989)).

That Court of Appeals has most recently identified three circumstances in which

extrarecord evidence may be consulted:7

      7
         In Kasper v. Commissioner, 

, 20-21 (2018), we noted a longer
list of exceptions as summarized in Esch v. Yeutter, 

, 991 (D.C. Cir.
1989). However, as the District Court for the District of Columbia has recently
observed:

      [T]he “trend” in the D.C. Circuit has been “towards limiting the
      circumstances in which district courts may consider evidence outside
      the administrative record[.]” United Student Aid Funds, Inc. v.
      Devos, 

, 4 (D.D.C. 2017). In Esch v. Yeutter, 

(D.C. Cir. 1989), the Circuit recognized eight “exceptions
      countenancing use of extra-record evidence.”

Since then,
      the Circuit has gradually winnowed the number of circumstances in
      which courts may consider extra-record evidence to three. * * *

Oceana, Inc. v. Ross, No. 17-CV-829 (CRC), ___ F. Supp. 3d ___, 

, at *3 n.5 (D.D.C. Apr. 17, 2020) (citing City of Dania Beach v. FAA,
                                                                    (continued...)
                                       - 22 -

      (1) if the agency “deliberately or negligently excluded documents that
      may have been adverse to its decision,” (2) if background information
      was needed “to determine whether the agency considered all the
      relevant factors,” or (3) if the “agency failed to explain administrative
      action so as to frustrate judicial review” * * *

City of Dania Beach v. FAA, 

, 590 (D.C. Cir. 2010) (quoting Am.

Wildlands v. Kempthorne, 

, 1002 (D.C. Cir. 2008)); James Madison

Ltd. by 

.

      Petitioner has not demonstrated that the 2019 submission meets any such

exception to the general rule limiting our review to the administrative record.

Accordingly, we will deny petitioner’s motion to supplement the record, as

supplemented, insofar as it relates to the 2019 submission. See Kansky v.

Commissioner, T.C. Memo. 2020-43, at *6-*7 (declining to supplement the

administrative record with a newspaper article that post-dated the WBO’s

determination).

      In his motion to supplement the record, as supplemented, petitioner alleges,

without meaningful support or basis, intentional and systemic efforts by the WBO

to undermine the whistleblower laws by wrongfully suppressing and denying


      7
        (...continued)

, 590 (D.C. Cir. 2010)); see also Hill Dermaceuticals, Inc. v. FDA,

, 47 (D.C. Cir. 2013) (“Esch has been given a limited interpretation
since it was decided[.]”).
                                       - 23 -

whistleblower awards. Although petitioner’s motion to supplement the record, as

supplemented, does not expressly ask us to supplement the record with anything

other than the 2012 submission and 2019 submission, it seems to contemplate

discovery and evidentiary hearings to develop additional extrarecord evidence.

For instance, petitioner’s motion indicates that to enable him to prove intentional

abuse of discretion, the record should include “sworn testimony from persons

familiar with the intentions of the WBO managers” and data on “[r]espondent’s

behavior over time” in suppressing whistleblower awards. Petitioner argues:

“Limiting the record to one case and precluding sworn depositions by WBO

employees is prejudicial to petitioner’s allegation of intentional wrongdoing and

systematic undermining of the whistleblower laws by Respondent and/or their

employees.”

      The Supreme Court has declared that “where there are administrative

findings that were made at the same time as the decision * * * there must be a

strong showing of bad faith or improper behavior before such inquiry [into the

mental processes of administrative decisionmakers] may be made.” Citizens to

Preserve Overton Park, Inc. v. Volpe, 

, 420 (1971) (emphasis added).

Petitioner has failed to make any such strong showing. His allegations are not

based on any meaningful documentation or other support but instead are based on
                                        - 24 -

inferences, speculation, and conjecture. As the Court of Appeals for the D.C.

Circuit has observed in somewhat analogous circumstances: “The ease with which

accusations of impropriety can be made must be compared to the difficulty judges

would face investigating such charges”. Deukmejian v. Nuclear Regulatory

Comm’n, 

, 1328 (D.C. Cir. 1984). We conclude that petitioner’s

allegations in this regard lack the requisite degree of specificity to warrant

discovery or evidentiary hearings to supplement the record. See

petitioner’s motion to supplement the record, as supplemented, might be

thought to seek supplementation of the record with additional unspecified

extrarecord evidence, it will be denied.

D. Respondent’s Motion for Summary Judgment

      1. Summary Judgment Standard

      Either party may move for summary judgment upon all or any part of the

legal issues in controversy. Rule 121(a) and (b); Naftel v. Commissioner, 

, 528-529 (1985). Ordinarily, under Rule 121(b) the Court may grant summary

judgment when there is no genuine dispute as to any material fact and a decision

may be rendered as a matter of law.8 Sundstrand Corp. v. Commissioner, 

       The standard of review set forth in Rule 121(b) is modeled after that
contained in Fed. R. Civ. P. 56(a) (formerly Fed. R. Civ. P. 56(c)).
                                       - 25 -

518, 520 (1992), aff’d, 

(7th Cir. 1994). However, this summary

judgment standard is not generally apt where we must confine ourselves to the

administrative record to decide whether there has been an abuse of discretion.9

      9
      As explained in Stuttering Found. of Am. v. Springer, 

,
207 (D.D.C. 2007):

             Under Rule 56(c) of the Federal Rules of Civil Procedure,
      summary judgment is appropriate when the pleadings and the
      evidence demonstrate that “there is no genuine issue as to any
      material fact and that the moving party is entitled to judgment as a
      matter of law.” Fed.R.Civ.P. 56(c). In a case involving review of a
      final agency action under the Administrative Procedure Act, 5 U.S.C.
      § 706, however, the standard set forth in Rule 56(c) does not apply
      because of the limited role of a court in reviewing the administrative
      record. See Sierra Club v. Mainella, 

, 89-90
      (D.D.C. 2006). Under the APA, it is the role of the agency to resolve
      factual issues to arrive at a decision that is supported by the
      administrative record, whereas “the function of the district court is to
      determine whether or not as a matter of law the evidence in the
      administrative record permitted the agency to make the decision it
      did.” See Occidental Eng’g Co. v. INS, 

, 769-770 (9th
      Cir.1985); see also Northwest Motorcycle Ass’n v. U.S. Dep’t of
      Agric., 

, 1472 (9th Cir. 1994) (“[T]his case involves
      review of a final agency determination under the [APA]; therefore,
      resolution of th[e] matter does not require fact finding on behalf of
      this court. Rather, the court’s review is limited to the administrative
      record.”). * * *

See also Green Tech. Grp., LLC v. United States, 

, 239 (2020)
(“Unlike a summary judgment proceeding, genuine issues of material fact will not
foreclose judgment on the Administrative Record.”) (citing Bannum, Inc. v.
United States, 

, 1356 (Fed. Cir. 2005)); Huashan Zhang v. USCIS,

, 45 (D.D.C. 2018) (“[D]ue to the limited role of a court in
                                                                      (continued...)
                                        - 26 -

The purpose of summary judgment is to avoid unnecessary trials. Fla. Peach Corp.

v. Commissioner, 

, 681 (1988). We deny a summary judgment motion

where there is a genuine factual dispute that requires a trial; but in a “record rule”

whistleblower case there will not be a trial on the merits. In such a case involving

review of final agency action under the APA, summary judgment serves as a

mechanism for deciding, as a matter of law, whether the agency action is

supported by the administrative record and is not arbitrary, capricious, an abuse of

discretion, or otherwise not in accordance with law. See Univ. Med. Ctr. of S.

Nev. v. Shalala, 

, 440 n.3 (D.C. Cir. 1999) (“[T]he question whether

* * * [an agency] acted in an arbitrary and capricious manner is a legal one which

the district court [or, as here, the Tax Court] can resolve on the agency record--

regardless of whether it is presented in the context of a motion for judgment on the

pleadings or in a motion for summary judgment[.]”); Ctr. for Food Safety v.

      9
        (...continued)
reviewing the administrative record, the typical summary judgment standards set
forth in Federal Rule of Civil Procedure 56(c) are not applicable.”). However, we
evidently cannot say that conventional summary judgment analysis is never
appropriate in a record rule case decided on an abuse-of-discretion standard. See
AstraZeneca Pharm. LP v. FDA, 

, 1139 (D.C. Cir. 2013) (stating
that a reviewing court “must allow summary judgment for the agency” unless the
party appealing the agency action “can demonstrate by record evidence that ‘a
genuine dispute’ exists as to some material fact supporting the proposition that the
* * * [agency’s] actions under review were ‘arbitrary, capricious, an abuse of
discretion, or otherwise not in accordance with law’”).
                                       - 27 -

Salazar, 

, 138 (D.D.C. 2012) (citing Richards v. INS, 

, 1177 & n.28 (D.C. Cir. 1977)).

      2. Analysis

      The central premise of respondent’s motion for summary judgment is that

the WBO’s final determination must be sustained because, he says, this Court’s

authority under section 7623(b)(4) is limited to ascertaining whether the IRS

proceeded with an action and collected proceeds as a result of the whistleblower’s

information. Although the WBO’s rejection of a claim necessarily precludes any

subsequent administrative or judicial action against any taxpayer and any

subsequent collection of proceeds from the taxpayer based on the information

provided, the WBO’s rejection of a claim does not preclude judicial review. See

Lacey v. Commissioner, 

. This Court has authority to review,

for abuse of discretion, the WBO’s decision to “reject” a claim for failing to meet

threshold requirements.

Moreover, as was true in Lacey, the

WBO’s final determination said nothing about the presence or absence of

“administrative action” or “proceeds” but rather stated that the claim was rejected

“because the information provided was speculative and/or did not provide specific

or credible information regarding tax underpayments or violations of internal

revenue laws.” Because those were the grounds invoked by the agency (and not
                                       - 28 -

“administrative action” or “proceeds”), those are the grounds we must consider as

we review the WBO’s determination. See

(citing SEC v. Chenery Corp.,

, 196 (1947)).

      The WBO is charged with making the initial evaluation of whistleblower

claims to determine whether they meet the minimum standards for an award. See

sec. 301.7623-1(c)(4), Proced. & Admin. Regs. The threshold criteria include that

a claim should:

      • “contain specific * * * information”;

      • “contain * * * credible information”;

      • provide “information that the whistleblower believes will lead to
        collected [tax] proceeds”;

      • report “fail[ure] to comply with the internal revenue laws”;

      • “identify the person(s) believed to have failed to comply with the
         internal revenue laws”;

      • “provide substantive information, including all available
         documentation”; and

      • not “provide speculative information”.

See Lacey v. Commissioner, 

(quoting sec. 301.7623-1(c)(1), (4),

Proced. & Admin. Regs.).
                                         - 29 -

      If a claim fails to meet those criteria, then the WBO may summarily “reject”

the claim without further consideration. “A rejection is a determination that

relates solely to the whistleblower and the information on the face of the claim that

pertains to the whistleblower.” Sec. 301.7623-3(c)(7), Proced. & Admin. Regs.

      The administrative record shows that the WBO received and reviewed

petitioner’s claim before forwarding it to Ms. Graves, a classifier in LB&I, for

further review. Ms. Graves reviewed petitioner’s claim and noted that it

referenced an earlier 2012 submission which had been “determined to lack

substance. The supplemental information provided in this claim does not have

enough information to support the alleged violations.” Ms. Graves recommended

that petitioner’s claim be rejected on the basis that the “[a]llegations are not

specific, credible, or are speculative--[a]llegations are purely speculative in

nature.” The WBO accepted Ms. Graves’ recommendation and issued its

determination rejecting petitioner’s claim because “the information provided was

speculative and/or did not provide specific or credible information regarding tax
                                        - 30 -

underpayments or violations of internal revenue laws.”10 We conclude that the

WBO did not abuse its discretion in rejecting petitioner’s claim on this rationale.

      The narrative attached to the Form 211 that petitioner submitted in 2018

alleged essentially two types of claims. First, petitioner alleged that the target had

engaged in “money laundering activities” with a third-party company that

allegedly abused U.S. Virgin Islands tax incentives. Petitioner’s “money

laundering” claim, however, is speculative in key respects. Moreover, it fails to

make clear whether it means to signify some violation of the tax laws by the target

itself (rather than by the third-party company or some other taxpayer) and

consequently whether the information about the alleged “money laundering”

scheme would be credibly thought to lead to collecting tax proceeds from the

target itself (rather than from the third-party company or some other taxpayer).

The grounds articulated by the WBO for rejecting this claim are warranted on the

basis of the information that petitioner provided.

      10
         This Court has previously faulted this sort of and/or formulation as lacking
clarity. See, e.g., Lacey v. Commissioner, 

, 170 (2019); Alber v.
Commissioner, T.C. Memo. 2020-20, at *8 n.5. The record is clear, however, that
in classifying petitioner’s claim Ms. Graves explicitly premised her recommended
rejection of the claim on conclusions both that his allegations were “purely
speculative” and that “the claim does not have enough information to support the
alleged violations.” The ARM adopted these recommendations. Accordingly we
review whether the WBO abused its discretion in rejecting petitioner’s claim
under these rationales.
                                        - 31 -

      As discussed above, we have granted petitioner’s request to supplement the

administrative record with the 2012 submission, which contains additional

background information about the alleged “money laundering” activity. These

materials, however, do not overcome the noted infirmities in petitioner’s claim as

they relate to the target. In fact, the 2012 submission does not even specifically

allege tax evasion by the target but merely states that petitioner “will provide a

future supplement detailing * * * [the target’s] role in the * * * scheme once the

Relator’s [petitioner’s] legal team concludes its analysis.” In his 2018 submission,

as foretokened in his 2012 submission, petitioner did in fact provide supplemental

information about the target’s alleged role in the alleged scheme. The classifier

reviewed the more complete information provided in petitioner’s 2018 submission

and determined that it failed to provide sufficient information to support his claim

about the target. We find no abuse of discretion in this determination.11

      11
         Where the administrative record is found to be insufficient, this Court may
remand a case to the WBO for reconsideration. See Whistleblower 769-16W v.
Commissioner, 

(2019). In the circumstances of the instant case, we
conclude that remand is unnecessary and would be unproductive. Even if the
classifier failed to consider the 2012 submission in making her determination, we
believe that any error in this regard was harmless. As noted, the 2012 submission
contains no specific allegations about the target that would affect the classifier’s
analysis or determination, as made on the basis of the more specific allegations
provided in the 2018 submission, that petitioner’s “money laundering” claims, as
they relate to the target, were speculative. In these circumstances, we do not
                                                                        (continued...)
                                        - 32 -

      As part of his whistleblower claim, petitioner also alleged that the target

improperly deducted interest on borrowed funds that petitioner alleged were used

to finance secondary-market life insurance investments. Petitioner alleged that

these deductions violated section 264 and resulted in tax underpayments of nearly

$1 billion. Once again, the facts that petitioner alleged appear speculative in key

respects. Moreover, it is basically indeterminate, on the basis of the alleged facts,

whether the target actually violated section 264, as petitioner’s claim asserts.12

The grounds articulated by the WBO for rejecting this claim are warranted on the

basis of the information that petitioner provided to the WBO.




      11
         (...continued)
believe that petitioner was prejudiced or that it would make sense to remand this
case to the WBO for reconsideration of its determination in the light of the 2012
submission. See PDK Labs., Inc. v. DEA, 

, 799 (D.C. Cir. 2004) (“If
the agency’s mistake did not affect the outcome, if it did not prejudice the
petitioner, it would be senseless to vacate and remand for reconsideration.”).
      12
         Sec. 264(a)(3) generally provides that no deduction is allowed for amounts
paid or accrued on indebtedness incurred to purchase a life insurance contract if
the debt was incurred pursuant to a plan of purchase which contemplates the
systematic borrowing of increases in the cash value of the insurance contract. Sec.
264(a)(3) is inapplicable if no part of any four annual premiums due in the first
seven-year period of an insurance contract is financed by means of indebtedness.
Sec. 264(c)(1). Petitioner’s allegations lack specific information to support a
nonspeculative conclusion that the target’s purported actions either meet the
criteria for applying the general rule of sec. 264(a)(3) or fall outside the exception
of sec. 264(c)(1).
                                       - 33 -

      3. WBO’s Discretion To Limit Scope of Investigations

      Petitioner complains that the WBO should have done more to investigate his

claims. His petition assigns as error that “in view of the amount of tax evaded and

amount of detail in the case, the IRS never followed up with either an interview of

me or my attorney, or with any other mailed requests for information.” The law

expressly provides, however, that in analyzing information received from an

individual, the WBO “in its sole discretion, may ask for additional assistance from

such individual or any legal representative”. Tax Relief and Health Care Act of

2006, Pub. L. No. 109-432, sec. 406(b)(1)(C), 120 Stat. at 2960 (emphasis added).

Because the WBO’s actions in this regard are committed to its “sole discretion”,

and the statute provides no meaningful standard by which to judge the WBO’s

exercise of that discretion, those actions are immune from judicial review. See 5

U.S.C. sec. 701(a)(2) (2012) (precluding judicial review of agency actions

“committed to agency discretion by law”); see also Heckler v. Chaney, 

, 830 (1985) (under 5 U.S.C. sec. 701(a)(2) “review is not to be had” in those

rare circumstances where the relevant statute “is drawn so that a court would have

no meaningful standard against which to judge the agency’s exercise of

discretion”).
                                        - 34 -

      Similarly, the petition assigns as error that petitioner’s allegations against

the target are “so appalling and detailed, that in-depth consideration is warranted.”

As this Court has explained, however:

             It is not to the Tax Court but to the Secretary of the Treasury
      that Congress has given the authority to “make the inquiries,
      determinations, and assessments of all taxes”, sec. 6201, and to
      “collect the taxes”, sec. 6301. The Tax Court has no practical means
      for evaluating the IRS’s audit priorities, its allocation of its audit
      resources, or its judgments about the likelihood of collecting
      particular liabilities. * * * Consequently, “we do not review the
      IRS’s decision whether to audit a target in response to a
      whistleblower’s claim and * * * we have no authority to require the
      IRS to explain a decision not to audit.” Lacey v. Commissioner, 153
      T.C. at ___ (slip op. at 30).

Cline v. Commissioner, T.C. Memo. 2020-35, at *15 (fn. refs. omitted).

      4. Alleged Procedural Irregularities

      In opposing respondent’s motion for summary judgment, petitioner suggests

that the IRS improperly failed to assign a claim number to his claim upon receipt

of Ms. Stengle’s March 1, 2016, letter and that the IRS failed to check whether the

information purportedly submitted with that letter had been forwarded to the

appropriate field office to be acted on. There is no evidence in the administrative

record, however, that the WBO actually received the March 1, 2016, letter before

March 21, 2018, when the WBO received petitioner’s Form 211 dated March 5,
                                         - 35 -

2018.13 Furthermore, even if the WBO did receive Ms. Stengle’s letter in 2016, it

is unclear whether she was authorized at that time to represent petitioner in his

claim against the target.14 As noted, a copy of Ms. Stengle’s March 1, 2016, letter

was in fact attached to petitioner’s 2018 submission, which was assigned a claim

number upon receipt by the WBO. In any event, there is no evidence that the IRS

ever commenced an action against, or collected proceeds from, the target as a

result of any information petitioner supplied.

      Petitioner contends that certain statements in the classification checklist

memorandum prepared by Ms. Graves are contradictory. He notes that the

classification checklist memorandum describes his claim as alleging that the target

had conspired “to evade millions in federal and local taxes” (emphasis added) but

goes on to state that “[t]he estimated dollar amount of the tax liability is less than


      13
        The only copy of the March 1, 2016, letter in the administrative record is
the unsigned copy attached to Ms. Stengle’s March 12, 2018, letter to the WBO.
And although that copy of the March 1, 2016, letter alludes to a Form 211, the
only Forms 211 in the administrative record are the Form 211 signed by petitioner
on March 5, 2018, and the Form 211, signed by petitioner on May 25, 2018, which
indicated that it was a “supplemental submission” to claim No. 2018-006801.
      14
         After the WBO received petitioner’s Form 211 dated March 5, 2018, it
sent a letter to Ms. Stengle advising her that because she had failed to submit a
valid Form 2848, the WBO was required to communicate directly with petitioner
about this claim. It was only subsequently that Ms. Stengle submitted to the WBO
a Form 2848, dated April 13, 2018, authorizing her to represent petitioner with
regard to his claim against the target.
                                        - 36 -

$2 million” and that petitioner’s “[a]llegations meet 7623(a) criteria”. Petitioner

contends that these purported inconsistencies show that respondent’s employees

were negligent and abused their discretion. We are not persuaded.

      According to the Internal Revenue Manual (IRM), for purposes of

classifying a claim as arising under section 7623(a) or (b), the whistleblower’s

description of the amount owed by the taxpayer is not determinative; even if the

alleged amount exceeds $2 million, the claim is to be considered a section 7623(a)

claim if “the claim does not identify a specific/credible tax issue or is purely

speculative in nature.” IRM pt. 25.2.2.7.1(2) (Jan. 12, 2018); cf. Smith v.

Commissioner, 

(2017) (holding that the “amounts in dispute”

referenced in the section 7623(b)(5)(B) threshold are the total amount of the

liability that the Commissioner proposed with respect to a taxpayer’s examination

that was commenced using the information provided by a whistleblower). Having

concluded that petitioner’s claim was “purely speculative”, the classifier acted in

accordance with IRM directives in treating the proceeds in dispute as involving

less than $2 million, so as to be characterized as a claim arising under section

7623(a).15 Consequently, we conclude that the classifier did not act arbitrarily in

      15
       As discussed supra note 6, the IRM lacks the force of law for purposes of
determining, for jurisdictional purposes, whether petitioner’s claim was properly
                                                                      (continued...)
                                        - 37 -

this regard. In any event, any error in this regard was harmless, as we have treated

petitioner’s claim as arising under section 7623(b) for purposes of our review.

      5. WBO Director’s Redelegation Authority

      In his reply to respondent’s response to petitioner’s motion to supplement

the record, as supplemented, petitioner argues for the first time that the WBO

Director improperly redelegated his authority to analyze petitioner’s information.

Under Delegation Order 25-7 (Rev. 3), IRM pt. 1.2.2.14.7(8) (July 14, 2016), the

Commissioner has delegated to the Director of the WBO the authority “to receive,

analyze, and assign information pursuant to IRC § 7623”. This delegation order

goes on to state: “This authority to receive and assign is redelegated to employee

of the Initial Claims Evaluation unit.”

suggests

that because the power to “analyze” information is expressly listed in powers

delegated to the Director of the WBO but is omitted from the list of powers that

may be redelegated, only the Director is authorized to “analyze” whistleblower

information. He argues that because respondent has not alleged, and the record




      15
        (...continued)
characterized as arising under sec. 7623(a). We find the IRM directives
instructive, however, in showing that the classifier acted in accordance with
established IRS directives.
                                         - 38 -

does not establish, “any direct analytical involvement of the Director of the WBO

in the current claim”, the WBO’s rejection of his claim was procedurally defective.

      We find no merit in petitioner’s argument. The authority to “analyze”

information is implicit in the authority to “receive and assign” information: There

would be no point in the Director’s assigning information, or in the recipient’s

receiving it, if the recipient lacked the authority to analyze it but could only

reassign it to someone else, who likewise would lack authority to analyze it, and

so on ad infinitum. Although the delegation order may be inartfully drafted, it is

clear enough, we think, that in referring to “[t]his authority” (emphasis added), the

delegation order refers in shorthand fashion to the previously described authority

“to receive, analyze, and assign information”. There is no requirement that the

WBO Director personally analyze all whistleblower information.

E. Conclusion

      In conclusion, the WBO’s rejection of P’s claim is supported by the

administrative record, as completed, and was not arbitrary, capricious, or an abuse

of discretion. Accordingly, we will grant respondent’s motion for summary

judgment.
                            - 39 -

To reflect the foregoing,


                                     An appropriate order and decision

                            will be entered.