Government Seeks Rehearing on Whistleblower Jurisdiction Issue

DAVID T. MYERS,
Petitioner-Appellant
v.
COMMISSIONER OF INTERNAL REVENUE,
Respondent-Appellee

IN THE UNITED STATES COURT OF APPEALS
FOR THE DISTRICT OF COLUMBIA CIRCUIT

ON APPEAL FROM THE ORDERS OF
THE UNITED STATES TAX COURT

APPELLEE'S PETITION FOR REHEARING EN BANC

RICHARD E. ZUCKERMAN
Principal Deputy Assistant Attorney General

TRAVIS A. GREAVES
Deputy Assistant Attorney General

GILBERT S. ROTHENBERG (202) 514-3361
JOAN I. OPPENHEIMER (202) 514-2954
JANET A. BRADLEY (202) 514-2930
Attorneys
Tax Division
Department of Justice
Post Office Box 502
Washington, D.C. 20044

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TABLE OF CONTENTS

Table of contents

Table of authorities

Statement under Fed. F. App. P. 35(b)(1)

Issues presented

Statement of the case

Argument:

Conclusion

Addendum

Certificate as to parties, rulings, and related cases

Certificate of compliance

Certificate of service

TABLE OF AUTHORITIES

Cases:

Statutes

Regulations:

Miscellaneous:

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 STATEMENT UNDER FED. R. APP. P. 35(b)(1)

The majority held that the 30-day period provided by Section 7623(b)(4) of the Internal Revenue Code of 1986 (I.R.C.) for bringing a challenge to an adverse IRS Whistleblower Office determination regarding a whistleblower award is non-jurisdictional. This holding conflicts with the Supreme Court's teachings in United States v. Wong, 135 S. Ct 1625 (2015), and Musacchio v. United States, 136 S. Ct. 709 (2016), regarding when Congress has made a clear statement that a statutory filing deadline is jurisdictional.

The majority's holding also conflicts with the Ninth Circuit's decision in Duggan v. Commissioner, 879 F.3d 1029 (9th Cir. 2018), which held that a virtually identical time limit in I.R.C. § 6330(d)(1) for filing a petition for review of a determination following a collection-due-process (CDP) hearing is jurisdictional and is not subject to equitable tolling.

The panel's decision has exceptional importance because it is binding precedent for all whistleblower cases in the nation since venue for whistleblower appeals is proper only in this circuit. See I.R.C. § 7482(b)(1) (flush language) (“If for any reason no subparagraph of the preceding sentence applies, then such decisions may be reviewed by the Court of Appeals for the District of Columbia”); Ware v. Commissioner, 499 F. App'x 957, 959, n.1 (11th Cir. 2012) (“Although venue for most appeals from the Tax Court is geographically tied to a petitioner's legal residence, the normal route for a whistleblower claim is an appeal to the Court of Appeals for the District of Columbia.”) (citing I.R.C. § 7482(b)(1)).

Finally, the majority's decision to allow equitable tolling of the filing deadline in § 7623(b)(4) has substantial administrative importance to the IRS due to the large number of closed whistleblower claims that could be reopened under the majority's decision.

ISSUES PRESENTED

STATEMENT OF THE CASE

David T. Myers filed a petition in the Tax Court challenging the IRS Whistleblower Office's determinations denying his application for a whistleblower award under I.R.C. § 7623(b)(4). Section 7623(b)(4) provides:

Any determination regarding an award under paragraph (1), (2), or (3) may, within 30 days of such determination, be appealed to the Tax Court (and the Tax Court shall have jurisdiction with respect to such matter).

Because Myers's petition was filed more than 8 months after the 30-day period in § 7623(b)(4) had expired, the Commissioner moved to dismiss the petition for lack of jurisdiction. The Tax Court granted the motion, holding that the filing period in § 7623(b)(4) was jurisdictional. 148 T.C. 438 (2017).

By published opinion, a divided panel of this Court reversed that ruling, holding that the 30-day filing period in § 7623(b)(4) is not jurisdictional and is subject to equitable tolling. (Add.1-22.)¹ The panel declined to “attach dispositive significance to the proximity between the provision setting the time period and the jurisdictional grant” because “there is nothing in the structure of the statute that conditions the jurisdictional grant on the limitations period, or otherwise links those separate clauses.” (Add.17; internal quotation marks omitted.)

The majority acknowledged that its holding was “in some tension” with that of the Ninth Circuit in Duggan “regarding a similarly worded provision of the Internal Revenue Code, 26 U.S.C. § 6330(d)(1).” (Add.20, quoting from Duggan, 879 F.3d at 1034.) Agreeing that §6330(d)(1) is “nearly identical in structure to the one at hand,” the majority “[n]evertheless” could not agree with the Ninth Circuit “that 'timely filing of the petition [is] a condition of the Tax Court's jurisdiction' simply because 'the filing deadline is given in the same breath as the grant of jurisdiction.'” (Add.20 (quoting from Duggan, 879 F.3d at 1034).) The majority distinguished the time limit in §7623(b)(4) from that in I.R.C. § 6015(e)(1)(A) (involving innocent spouse claims), which the Second, Third, and Fourth Circuits have held to be jurisdictional,² on the ground that, in § 6015(e)(1)(A), the “grant of jurisdiction [wa]s followed by an 'if' clause that expressly conditions jurisdiction upon timely filing.” (Add.18, n.1.)

The majority also held that the filing deadline in § 7623(b)(4) was subject to equitable tolling, reasoning that the fact “[t]hat the whistleblower award statute is not unusually protective of claimants is the only consideration on the IRS side of the ledger.” (Add.22.) Without more, the majority was “not persuaded to set aside a presumption that has been so consistently applied.” (Add.22.)

Judge Henderson dissented. In her view, under the Supreme Court's pronouncements, the “30-day filing period in § 7623(b)(4) is one of the rare instances in which the Congress intended to make §7623(b)(4)'s filing period jurisdictional” because the parenthetical clause — “(and the Tax Court shall have jurisdiction with respect to such matter)” — “expressly 'speak[s] in jurisdictional terms.'” (Add.27.) According to the dissent, “the parenthetical clause renders the remainder of § 7623(b)(4) jurisdictional 'by incorporating [it] into [the] jurisdictional provision.' ” (Add.27 (internal quotation marks omitted).) This incorporation resulted from the statutory term “such matter,” which provided “words linking the time period for filing to the grant of jurisdiction.” (Add.27.)

ARGUMENT

A. The filing deadline in I.R.C. § 7623(b)(4) for mounting a Tax Court challenge to an IRS Whistleblower Office determination regarding a whistleblower award is jurisdictional

The Tax Court, as an Article I court, is a court of limited jurisdiction and may exercise jurisdiction only to the extent authorized by Congress. Freytag v. Commissioner, 501 U.S. 868, 870-71 (1991); Edwards v. Commissioner, 791 F.3d 1, 5 (D.C. Cir. 2015). Section 7623 authorizes the IRS to pay awards to individuals, known as “whistleblowers,” who provide information that (1) leads to an IRS administrative or judicial action, and (2) results in the collection of proceeds. See Simmons v. Commissioner, 523 F. App'x 728, 729-30 (D.C. Cir. 2013).

The Tax Court has exclusive jurisdiction to review an administrative determination regarding an award under I.R.C. § 7623. Section 7623(b)(4) provides: “Any determination regarding an award under paragraph (1), (2), or (3) may, within 30 days of such determination, be appealed to the Tax Court (and the Tax Court shall have jurisdiction with respect to such matter).”

While the Supreme Court has stated that “filing deadlines ordinarily are not jurisdictional,” Sebelius v. Auburn Reg'l Med. Ctr., 568 U.S. 145, 154 (2013), it has repeatedly held that Congress may make a time limit jurisdictional by providing a “clear indication” of the limit's jurisdictional status. Henderson v. Shinseki, 562 U.S. 428, 439 (2011); see Owens v. Republic of Sudan, 864 F.3d 751, 801 (D.C. Cir. 2017); see also, e.g., Musacchio, 136 S. Ct. at 717.

To determine whether such a clear indication exists, courts “examine 'the text, context, and relevant historical treatment' of the provision at issue.” Musacchio, 136 S. Ct. at 717 (quoting Reed Elsevier, Inc. v. Muchnick, 559 U.S. 154, 166 (2010)); see Owens, 864 F.3d at 801. In other words, a statutory time limit is jurisdictional if “traditional tools of statutory construction . . . plainly show that Congress imbued [the limit] with jurisdictional consequences.” Wong, 135 S. Ct. at 1632; see Owens, 864 F.3d at 801; see also National Fed'n of Indep. Bus. v. Sebelius, 567 U.S. 519, 544 (2012) (“the best evidence of Congress's intent is the statutory text”).

Statutory text provides a clear indication that a time limit is jurisdictional if it “expressly refer[s] to subject-matter jurisdiction or speak[s] in jurisdictional terms.” Musacchio, 136 S. Ct. at 717; see Doak v. Johnson, 798 F.3d 1096, 1104 (D.C. Cir. 2015). This does not mean that Congress must use the term “jurisdiction” (see, e.g., Gonzalez v. Thaler, 565 U.S. 134, 142 (2012)) or any other “magic words” (Wong, 135 S. Ct. at 1632 (internal quotation marks omitted)). Rather, it simply means that “Congress must do something special, beyond setting an exception-free deadline, to tag a statute of limitations as jurisdictional.” Wong, 135 S. Ct. at 1632; see Duggan, 879 F.3d at 1032.

Contrary to the majority's holding, in § 7623(b)(4) the Congress used language that “speak[s] in jurisdictional terms” by “expressly refer[ring] to” the Tax Court's “subject-matter jurisdiction.” Musacchio, 136 S. Ct. at 717. Further, Congress placed the jurisdictional language in the same sentence and subsection as the time limit for filing a petition seeking review of the Whistleblower Office's determination. Thus, the link between timeliness and jurisdiction in § 7623(b)(4) is proximate and explicit. See Fort Bend Cty. v. Davis, 139 S. Ct. 1843, 1849 (2019) (“Congress may make other prescriptions jurisdictional by incorporating them into a jurisdictional provision, as Congress has done with the amount-in-controversy requirement for federal-court diversity jurisdiction [in 28 U.S.C. § 1332(a)]³”).

The majority opinion correctly cited the Supreme Court's standards, but it did not correctly apply them. In articulating the standards, the majority recognized that Congress need not “incant magic words in order to speak clearly” (Add.18, citing Auburn, 568 U.S. at 153), but need only “include words linking the time period for filing to the grant of jurisdiction” (Add.18). The majority went astray, however, when it found that § 7623(b)(4) would have satisfied the clear-indication standard if it had used the word “if.” On this point, the majority distinguished (Add.18, n.1) the decisions from three other circuits — which held that the time limitation in I.R.C. § 6015(e)(1)(A) is jurisdictional — because the statute at issue in those cases said that the Tax Court shall have jurisdiction to review innocent-spouse determinations “if” a timely petition is filed. See Nauflett v. Commissioner, 892 F.3d 649, 654 (4th Cir. 2018); Matuszak v. Commissioner, 862 F.3d 192, 197-98 (2d Cir. 2017); Rubel v. Commissioner, 856 F.3d 301, 306 (3d Cir. 2017).

Contrary to the majority's understanding, however, there is nothing magical about the word “if.” Take, for example, the statement “Give me $100 by Friday and the baseball tickets are yours.” That statement does not include the word “if,” but the only natural understanding of the statement is that the tickets are yours if the money is paid by Friday.

By including the term “such matter” in § 7623(b)(4)'s grant of jurisdiction, Congress spoke in terms that are as clear as the baseball-ticket analogy set forth above. As the dissent recognized (Add.27), the word “such” refers to things “previously characterized or specified,” (id., quoting Webster's Third New International Dictionary 2283 (2002)). See also Bryan A. Garner, A Dictionary of Modern Legal Usage, 849 (2d ed. 1995) (“Such is properly used as an adjective when reference has previously been made to a category of persons or things”). In §7623(b)(4), there are not one — but two — “matters” that are antecedent to the word “such.” First, a determination must be made by the IRS Whistleblower Office. And second, an appeal from that determination must be filed with the Tax Court within 30 days of the determination. It is therefore not plausible to read the term “such matter” as referring only to the first of these antecedents, as the majority did (Add.19). Rather, just like the baseball-ticket analogy, the most natural reading of § 7623(b)(4) is that the Tax Court acquires jurisdiction if the IRS Whistleblower Office makes a determination and if an appeal from that determination is filed within 30 days.

The majority recognized that its holding “is in some tension” with that of the Ninth Circuit regarding “a similarly worded provision of the Internal Revenue Code, 26 U.S.C. § 6330(d)(1).” (Add.20.) But that is an understatement (to say the least). It is simply not possible to reconcile the decision in this case with Duggan.

In Duggan, the Ninth Circuit analyzed I.R.C. § 6330(d)(1), a statute that is, in all materially respects, worded the same as §7623(b)(4). Section 6330(d)(1) provides that a person who received a determination from the IRS Office of Appeals following a CDP hearing “may, within 30 days of a determination under this section, petition the Tax Court for review of such determination (and the Tax Court shall have jurisdiction with respect to such matter).”

The Ninth Circuit ruled that § 6330(d)(1) “expressly contemplates the Tax Court's jurisdiction” since “the filing deadline is given in the same breath as the grant of jurisdiction.” 879 F.3d at 1034. Thus, the Ninth Circuit held that the “ 'unambiguous' ” and “plain language of 6[3]30(d)(1) confers jurisdiction on the Tax Court if (and only if) a petition for review is filed in that court within thirty days of the IRS's determination.” Id. The Ninth Circuit then concluded that “because the text of § 6[3]30(d)(1) conditions the Tax Court's jurisdiction on the timely filing of a petition for review, the thirty-day deadline in §6330(d)(1) is jurisdictional.” Id. at 1035. The dissent in the case at bar correctly observed that the majority did “not meaningfully address” its conflict with Duggan that the “nearly identical language” in §6330(d)(1) was jurisdictional. (Add.30, n.2.)

The dissent was also correct in observing that the majority's decision is “at odds with” the decisions from the Second, Third, and Fourth Circuits holding that the “similarly worded filing period” in § 6015(e)(1)(A),” which is “equivalent in all material aspects” to § 7623(b)(4), was jurisdictional.⁴ (Add.30, n.2, citing Matuszak, Rubel, and Nauflett.) Section 6015(e)(1)(A) provides that “the individual may petition the Tax Court (and the Tax Court shall have jurisdiction) to determine the appropriate relief available to the individual under this section if such petition is filed . . . not later than the close of the 90th day after the date” on which “the [IRS] mails . . . notice of the [IRS's] final determination of relief available to the individual. . . .” As explained above, and as the dissent recognized, the term “such matter” in § 7623(b)(4), “serves the same function as 'if' in § 6015(e)(1)(A); it expressly links the provision's jurisdictional grant to its filing period.” (Add.30, n.2.)

The Supreme Court's decision in Auburn, on which the majority relied (Add.20-22), is distinguishable. The Medicare statute at issue in Auburn, 42 U.S.C. § 1395oo(a), allowed a health care provider to “obtain a hearing [with the Provider Reimbursement Review Board (PRRB)] . . . if . . . (1) such provider — (A)(i) is dissatisfied with a final determination of the organization . . . (2) the amount in controversy is $10,000 or more and (3) such provider files a request . . . within 180 days after notice of the intermediary's final determination. . . .”

In Auburn, as the dissent noted, the Supreme Court held only that the time limit in subpart (3), which “would otherwise [be] classif[ied] as nonjurisdictional . . . does not become jurisdictional simply” due to its proximity to subparts (1) and (2), which contain the jurisdictional provisions. (Add.29.) But, as the dissent here pointed out, in I.R.C. §7623(b)(4), “the filing period and jurisdictional grant occupy the same statutory provision, not neighboring provisions.” (Add.29; emphasis in original.) Moreover, as the dissent also observed, the Medicare statute is “344 words long and is divided into separate statutory paragraphs, sub-paragraphs, and sub-sub-paragraphs” whereas § 7623(b)(4) contains “36-word[s] . . . and share[s] the same statutory paragraph. . . .” (Add.29, n.1.) Auburn is thus not on point.

In sum, § 7623(b)(4) satisfies the “clear-indication” standard established by such cases as Musacchio and Wong. By placing the grant of jurisdiction in language immediately following the time limitation, Congress could hardly have done more to link the two provisions. And, as discussed above, the term “such matter” in § 7623(b)(4) is most naturally read to equate with the term “if” in § 6015(e)(1)(A). Thus, §7623(b)(4) contains the requisite clear statement that Congress intended the 30-day time limit to be jurisdictional.

B. The 30-day period to challenge an IRS Whistleblower Office determination regarding a whistleblower award is not subject to equitable tolling

Even if the time limitation in § 7623(b)(4) is not jurisdictional, it should not be read to allow for equitable tolling. “[A] nonjurisdictional federal statute of limitations is normally subject to a 'rebuttable presumption' in favor 'of equitable tolling' ” (Holland v. Florida, 560 U.S. 631, 645-46 (2010) (quoting Irwin v. Department of Veterans Affairs, 498 U.S. 89, 95-96 (1990) (emphasis omitted)) “unless tolling would be inconsistent with the text of the relevant statute” (Young v. United States, 535 U.S. 43, 49 (2002); internal quotation marks omitted). The presumption is a “realistic assessment of legislative intent” in cases where the statutory scheme is “unusually protective” of claimants.” Auburn, 568 U.S. at 159 (quoting Irwin, 498 U.S. at 95); Bowen v. City of New York, 476 U.S. 467, 480 (1986).

The majority recognized that the whistleblower statute is not designed to be unusually protective of claimants and that this factor supported the Commissioner's position on the inapplicability of equitable tolling. (Add.22.) Nonetheless, the majority distinguished Auburn, on which the Commissioner relied, on the ground that the inapplicability of equitable tolling in that case also rested on additional factors, including that the Medicare payment scheme is not one in which laymen, unassisted by trained lawyers, initiate the process; instead, providers are “sophisticated” repeat players who are “assisted by legal counsel.” (Add.21-22; internal quotation marks omitted.)

But the majority erred in concluding that Tax Court petitioners challenging whistleblower determinations “are typically pro se, individual taxpayers who have never petitioned the Tax Court before.” (Add.22.) To the contrary, the Tax Court in Whistleblower 14377-16W v. Commissioner, 148 T.C. 510, 518-19 (2017), observed that “a cottage industry has sprung up involving mining publicly available documents for the chance to claim a bounty from the IRS” and that there are “serial filers” in whistleblower cases. The Tax Court further observed that The New York Times reported as follows on Sept. 11, 2012 (id. at 518, n.5):

Since the law was strengthened in 2006, it has spawned a cottage industry of whistle-blower lawyers and private investigators. They have generated hundreds of claims alleging tens of billions of dollars in tax evasion. In a few cases, hedge funds have actually invested in the cases, paying whistle-blowers cash up front in exchange for a percentage of any award they ultimately collect.

D. Kocieniewski, “Whistle-Blower Awarded $104 Million by I.R.S.”,  http://www.nytimes.com/2012/09/12/business/whistleblower-awarded–104–million-by-irs.html.

Moreover, the dockets of the both this Court and the Tax Court show cases by pro se petitioners who have filed multiple whistleblower petitions. E.g., Meidinger v. Commissioner, 2019 WL 2562949 (D.C. Cir. 2019); Meidinger v. Commissioner, 662 F. App'x 774 (11th Cir. 2016); Meidinger v. Commissioner, 559 F. App'x 5 (D.C. Cir. 2014); Cooper v. Commissioner, 136 T.C. 597 (2011); Cooper v. Commissioner, 135 T.C. 70 (2010); Kasper v. Commissioner, 2018 WL 345121; Kasper v. Commissioner, 2017 WL 2822075; Perales v. Commissioner, 2018 WL 5292267; Perales v. Commissioner, 2017 WL 2297591; Friedland v. Commissioner, 2011 WL 3962638; Friedland v. Commissioner, 2011 WL 1627958. That whistleblowers are often “repeat players” who are “assisted by legal counsel”⁵ is a strong indication that, just as in Auburn, equitable tolling is not a realistic assessment of legislative intent.

Furthermore, the majority's decision allowing equitable tolling would wreak havoc on the IRS's need for administrative finality, just like the situation addressed by the Supreme Court in United States v. Brockamp, 519 U.S. 347 (1997), where the Court held that equitable tolling was not available to save late tax refund claims: “To read an 'equitable tolling' exception into § 6511 could create serious administrative problems by forcing the IRS to respond to, and perhaps litigate, large numbers of late claims, accompanied by requests for 'equitable tolling' which, upon close inspection, might turn out to lack sufficient equitable justification.” Id. at 352.

The IRS Whistleblower Office Annual Reports for 2016–2018 show that that office closed claims of 21,124, 14,445, and 12,833 in those years. https://www/irs.gov/compliance/whistleblower-office-annual-reports. Under the majority's view, any time-barred claims could be reopened by assertions of equitable tolling, thus creating “serious administrative problems.” Brockamp, 519 U.S. at 352. The importance of finality is all the more striking when, as often happens, several whistleblowers assert independent claims to the same collected proceeds. See 26 C.F.R. § 301.7623-4(c)(4). Allowing judicial review after the 30-day period has expired could lead to challenges to otherwise final award determinations after the relevant proceeds have already been paid to other whistleblowers.

In short, the majority's decision in this case opens the door to tens of thousands of late challenges to whistleblower determinations — a door that we think Congress clearly closed in enacting I.R.C. § 7623(b)(4). Plenary review by this Court is warranted to correct the majority's misreading of this statute having nationwide application.

CONCLUSION

Rehearing en banc should be granted, and, upon rehearing, the orders of the Tax Court dismissing the petition for lack of jurisdiction should be affirmed.

Respectfully submitted,

RICHARD E. ZUCKERMAN
Principal Deputy Assistant Attorney General

TRAVIS A. GREAVES
Deputy Assistant Attorney General

JANET A. BRADLEY

GILBERT S. ROTHENBERG (202) 514-3361
JOAN I. OPPENHEIMER (202) 514-2954
JANET A. BRADLEY (202) 514-2930
Attorneys
Tax Division
Department of Justice
Post Office Box 502
Washington, D.C. 20044

SEPTEMBER 2019