[00:00:00] Speaker 05: Case number 22-1239, Roy J. Meininger Sr., a balance versus commissioner of internal revenue. [00:00:08] Speaker 05: Ms. [00:00:08] Speaker 05: Stone-Cypher, I mean, Ms. [00:00:09] Speaker 05: Currie, Mr. Meininger for the balance, Ms. [00:00:12] Speaker 05: Aveda for the appellee. [00:00:14] Speaker 03: Ms. [00:00:14] Speaker 03: Stone-Cypher, you may want to move the podium down a little bit. [00:00:20] Speaker 04: Thank you, Your Honor. [00:00:23] Speaker 04: I am not very tall. [00:00:27] Speaker ?: Thank you. [00:00:29] Speaker 04: Good morning, and may it please the court. [00:00:32] Speaker 04: I'm Jillian Stonecypher, arguing on behalf of court-appointed amicus in support of appellant's position on jurisdiction. [00:00:39] Speaker 04: And I've reserved two minutes for rebuttal. [00:00:43] Speaker 04: I'd like to start with the text of the statute, because I think that gets us all the way to the right answer here. [00:00:49] Speaker 04: So we start with B4. [00:00:51] Speaker 04: B4 tells us that there's jurisdiction over any determination regarding awards under paragraphs one through three. [00:00:59] Speaker 04: So we look at paragraph one, which as Lee tells us, says that these paragraphs apply if the secretary proceeds with any administrative action as a result of a whistleblower claim. [00:01:11] Speaker 04: What administrative actions? [00:01:13] Speaker 04: The statute goes on to say any administrative action described in subsection A. Subsection A relates to detecting underpayments of tax or detecting and bringing to trial and punishment people guilty of violating tax laws. [00:01:29] Speaker 04: Read together, these provisions tell us there is jurisdiction to review the determination when the IRS reaches that determination regarding an award after proceeding with any administrative action for the detecting of underpayments of tax or persons guilty of violating tax laws. [00:01:49] Speaker 04: That's exactly what happened here. [00:01:51] Speaker 04: Mr. Meidinger submitted a claim of Form 211. [00:01:54] Speaker 04: The whistleblower office reviewed it, decided it met the requirements of a claim, and then it referred it on to the IRS, to an IRS operating division, where an IRS agent conducted further investigation, including reviewing a taxpayer's returns. [00:02:12] Speaker 04: That counts as any determination regarding an award under B1, in that it is a determination not to make an award, and it is a determination after proceeding with any administrative action relating to the detection of unpaid taxes or violations of the tax loss. [00:02:33] Speaker 04: That gives us the answer. [00:02:35] Speaker 04: There is jurisdiction. [00:02:36] Speaker 06: Miss Cypher, why is the action taken by the operating division here a determination regarding an award? [00:02:45] Speaker 06: Why isn't it similar to the type of non-enforcement decision made by the whistleblower office and the lead? [00:02:53] Speaker 04: It's different in meaningful ways. [00:02:54] Speaker 06: Does it really matter which part of the IRS decides not to proceed against a taxpayer? [00:03:01] Speaker 04: It does, I think, and we know that from looking at what the IRS says about what it does at these different stages. [00:03:08] Speaker 04: When it's at the true threshold, the threshold rejection like this court had in Lee, it's looking only at the whistleblower and information about the whistleblower and the face of the whistleblower's claim. [00:03:19] Speaker 04: The court said that in Shantz. [00:03:21] Speaker 04: When it goes further, when it refers to an operating division, a decision after that is a decision that's based on information about the taxpayer. [00:03:30] Speaker 04: And that matters, I think, under subsection A. Because when you're rejecting a whistleblower claim as inadequate, they didn't fill out their name right. [00:03:38] Speaker 04: They didn't identify a taxpayer. [00:03:40] Speaker 04: You're not engaging in any action for the detection of underpayments of tax or to identify a violator. [00:03:47] Speaker 04: But if you go further, [00:03:48] Speaker 06: and you're looking at the taxpayer's information, at that point, you have engaged in any administrative action under A. But the statute doesn't say that you have jurisdiction over actions taken pursuant to information by a whistleblower. [00:04:03] Speaker 06: It says that the tax court has jurisdiction over any determination regarding an award. [00:04:11] Speaker 06: So where there are no proceeds and there's no action taken against a taxpayer, [00:04:17] Speaker 06: How do you get under the jurisdictional provision? [00:04:20] Speaker 04: Yeah. [00:04:21] Speaker 04: So if you look at just B4 and you're not looking to the B1 limitation that Lee found was jurisdictional, I think that's even broader. [00:04:31] Speaker 04: You don't have to find any administrative action. [00:04:33] Speaker 04: You just have to find any determination regarding an award. [00:04:37] Speaker 04: And the words any and regarding award [00:04:40] Speaker 04: Yeah, regarding an award. [00:04:41] Speaker 04: That means relating to an award. [00:04:43] Speaker 04: It doesn't say a positive award. [00:04:45] Speaker 04: It doesn't say relating to the amount of an award. [00:04:47] Speaker 06: There can't be an award unless there are proceeds. [00:04:50] Speaker 06: Unless there's been some recovery against a taxpayer, in some ways it seems to me like the quibbling about what constitutes an action is maybe less important than the statutory conditions for an award, which is that there has to be some recovery. [00:05:07] Speaker 06: And where there's no recovery, there's just simply no determination. [00:05:12] Speaker 04: I think if the statute said a determination relating to an award that has been made or a determination relating to the amount of an award, that that would be a good reading. [00:05:23] Speaker 04: But here, the language says any, any determination relating to. [00:05:28] Speaker 04: And that is just broadening language. [00:05:30] Speaker 04: And it's hard to say that a decision not to make an award is not a determination relating to an award. [00:05:38] Speaker 04: Relating to is really broad. [00:05:41] Speaker 04: If I say I will not be making an award today, that is a determination. [00:05:45] Speaker 06: The paragraphs one, two, and three make it clear that an award is after there have been some recovery of proceeds. [00:05:55] Speaker 06: I mean, you can't really read paragraphs one, two, and three without there being some sort of proceeds, right? [00:06:02] Speaker 06: The first paragraph one is all about how much an award is, right, between 15% and 30%. [00:06:10] Speaker 06: award in case of less than substantial contribution, again, suggests that there have been proceeds, reduction in or denial of award, right? [00:06:20] Speaker 06: All of these things are about the fact that there's been some recovery. [00:06:24] Speaker 06: And so four, yes, any is a very broadening word, but paragraphs one, two, and three make it clear that an award results from some recovery against the taxpayer. [00:06:34] Speaker 04: I think paragraphs one through three do make clear that an award is necessary for recovery. [00:06:40] Speaker 04: for a whistleblower to state a claim to prevail on the merits, they do definitely need to show that there were proceeds. [00:06:47] Speaker 04: But that's not what before it says is the barrier to jurisdiction. [00:06:52] Speaker 04: And in fact, that's going to be a fact that's going to need to be determined at a later point in the proceeding. [00:06:58] Speaker 04: Asking the whistleblower at the doorstep before gaining access to the administrative record to establish the record that proceeds were collected is [00:07:08] Speaker 04: closing the door to potentially meritorious whistleblower claims. [00:07:12] Speaker 04: And the courts are very careful not to do that, to read these merits determinations into the jurisdictional analysis because it's unfair to litigants and because it burdens the court. [00:07:24] Speaker 04: If the court has to make this determination at the threshold as to whether proceeds were collected, that's gonna create additional litigation, additional cases in front of the tax court. [00:07:35] Speaker 04: And this one addressing this merits determination. [00:07:39] Speaker 06: They don't have to prove it. [00:07:41] Speaker 06: I mean, at the jurisdictional threshold, they have to plausibly allege that there were proceeds, right? [00:07:47] Speaker 06: And then they would have to prove it down the line, but the burden increases at each stage of litigation. [00:07:54] Speaker 06: Yes, but if you look at the here, Mr. Midinger doesn't claim that there were any proceeds recovered. [00:08:00] Speaker 04: The letter that Mr. Midinger received said the IRS decided not to pursue the information you provide. [00:08:07] Speaker 06: So then why is that not a non enforcement decision that's unreviewable in any event? [00:08:13] Speaker 04: Well, a non-enforcement decision, the line of cases talking about non-enforcement being non-reviewable also goes to the merits. [00:08:22] Speaker 04: It doesn't go to jurisdiction. [00:08:23] Speaker 04: This court made that clear in a case earlier this year, N Citizens United, which is 90F4 at 1172, page 1181. [00:08:33] Speaker 04: The court explicitly addressed whether Cheney is a jurisdictional bar and found that it was not, that it was error to consider it a bar to jurisdiction. [00:08:41] Speaker 04: So while these things may make it easy to resolve some of these cases on the merits to find that the whistleblower is seeking some kind of remedy that is not available, it's wrong, it's error to make that a jurisdictional question. [00:08:59] Speaker 04: And here I think there's just nothing in the text of the statute that says proceeds are required as a jurisdictional matter. [00:09:06] Speaker 04: It could have been possible to read B1 to say the entirety of B1 is jurisdictional and therefore there have to be proceeds collected as a result of the whistleblower's tip. [00:09:18] Speaker 04: That's not what the court did in LSAC. [00:09:20] Speaker 04: It's not what it did in via RSA, which is undisputedly good law. [00:09:23] Speaker 04: The court decided not to read the entirety of V1 as jurisdictional. [00:09:28] Speaker 04: And there's nothing in the text that allows you to draw a line between proceeds collected as a result of the whistleblower's tip and proceeds collected not as a result of the whistleblower's tip. [00:09:41] Speaker 04: There's just no way to read that into the text of the statute. [00:09:45] Speaker 02: The Supreme Court has told us over and over again recently to be very careful before we call things jurisdictional. [00:09:53] Speaker 02: But usually, I think it's arisen in the context of Article III courts and our jurisdiction. [00:09:59] Speaker 02: How should we think about the message coming out of the Supreme Court on the one hand, but the tax court being not an Article III court on the other hand? [00:10:12] Speaker 04: I think the analysis is the same Article three courts and the tax courts are all courts of limited jurisdiction and in every instance there needs to be a statute granting. [00:10:23] Speaker 04: jurisdiction in the case has to fall within the boundaries of jurisdiction. [00:10:26] Speaker 04: The general rules that the Supreme Court has announced about how you interpret statutory grants of jurisdiction apply equally when you're talking about an Article III court and the tax court. [00:10:38] Speaker 04: In both instances, you want to be careful not to read the grant narrowly in a way that makes merits determinations jurisdictional. [00:10:49] Speaker 02: It's okay if you don't, but do you happen to know any precedent that says what you just said, where ideally a Supreme Court precedent would say, we've been telling the lower courts over and over again, be careful about calling things jurisdictional unless you're really sure that they are jurisdictional. [00:11:06] Speaker 02: And that principle also applies to non-Article 3 courts. [00:11:12] Speaker 04: I'm not thinking of a Supreme Court decision off the top of my head, but Lee Sack said that. [00:11:17] Speaker 04: And as my colleague agrees, that portion of Lee Sack is still binding law and that applied cases that make this very distinction. [00:11:27] Speaker 04: Thank you. [00:11:29] Speaker 03: Okay. [00:11:29] Speaker 03: We'll give you a couple of minutes in reply. [00:11:31] Speaker 03: Thank you. [00:11:36] Speaker 03: Mr. Mining. [00:12:03] Speaker 01: Your honor, I am appealing the improper handling of my whistleblower claim by the IRS whistleblower office and the dismissal of my petition by the tax court. [00:12:15] Speaker 01: The IRS whistleblower office is divided into two sections. [00:12:19] Speaker 01: The initial claims evaluation group, which conducts a preliminary evaluation of the claims credibility and relevance, and the subject matter group, which [00:12:31] Speaker 01: performs a detailed analysis and consults with the IRS operations divisions whether the taxpayer should be audited or the claim denied. [00:12:43] Speaker 01: The administrative actions ensure claims are actionable. [00:12:48] Speaker 01: The administrative record shows that the whistleblower office made a significant procedural error by investigating the wrong tax [00:13:00] Speaker 01: Under 26 USC 7623B4, I have the right to appeal the IRS's decision. [00:13:08] Speaker 01: And my petition specifically requested a review of whether the whistleblower office follows the proper administrative procedures. [00:13:17] Speaker 01: The Supreme Court has made it clear that courts are limited to reviewing the cause of action presented in the petition. [00:13:25] Speaker 01: The whistleblower office procedure review is central to my petition. [00:13:30] Speaker 01: The tax court dismissed my case without reviewing the administrative record or providing an evidential explanation. [00:13:38] Speaker 01: The Fifth Amendment guarantees my right to due process, both procedurally and substantially. [00:13:45] Speaker 01: The whistleblower's office error caused harm to me, including loss of compensation and reputational damage, which establishes my standing under Article 3, Section 2 of the Constitution. [00:13:58] Speaker 01: that ensures a judicial review for actions taken by the federal agencies like the IRS. [00:14:05] Speaker 01: Additionally, on the 26th, USC 7482, the Court of Appeals must review that the tax court decisions was made with proper evidence and legal reasoning. [00:14:19] Speaker 01: This court is responsible for protecting the individual's constitutional rights and must send a clear message to the IRS and the tax court [00:14:27] Speaker 01: that they cannot strip away those rights by doing nothing or claiming a lack of subject matter jurisdiction. [00:14:35] Speaker 01: I request that the court review the whistleblower's office procedures and remand the case for further investigation. [00:14:42] Speaker 01: The integrity of the judicial process demands accountability, and this court must act to ensure that the justice is not denied through inaction. [00:14:52] Speaker 01: Thank you very much. [00:14:53] Speaker 03: Thank you. [00:14:56] Speaker 03: Miss the better. [00:15:05] Speaker 05: Please. [00:15:05] Speaker 05: The court Julia that for the commissioner. [00:15:07] Speaker 05: Um I want to speak very briefly to a point raised earlier about whether a decision not to make an award is a determination regarding an award. [00:15:17] Speaker 05: The tax court for some time had helped that it was in [00:15:23] Speaker 05: which this court expressly abrogated in Lee and said that that can't be right. [00:15:27] Speaker 05: There's no such thing as a negative determination. [00:15:31] Speaker 05: A decision not to take action is a decision not to even meet the threshold conditions of the statute, therefore is presumptively unreviewable. [00:15:39] Speaker 05: It's a non-prosecution decision of the type described in Heckler versus Cheney. [00:15:46] Speaker 02: Does an IRS examination always involve or an IRS audit always involve at least notifying the taxpayer who is being audited? [00:15:56] Speaker 02: I believe so. [00:15:58] Speaker 02: And assume for the sake of this next question that though I might be sympathetic to the theory that Judge Rao has articulated with regard to reading the SAC, [00:16:13] Speaker 02: narrowly, assume that I think LSAT ties our hands a little bit more than that, and that we're not allowed to say that the tax court lacks jurisdiction simply because whenever there are no proceeds, we're not allowed to make that the rule. [00:16:37] Speaker 02: What do you think of the rule that I floated earlier, which would go something like, [00:16:43] Speaker 02: the IRS proceeds with an administrative action against the taxpayer when it stops talking to itself and at least make some kind of contact with the taxpayer? [00:17:02] Speaker 05: There's a nicety there. [00:17:03] Speaker 05: because there are contacts with the taxpayer that can fall short of an administrative or judicial action. [00:17:08] Speaker 05: Okay, tell me about that. [00:17:09] Speaker 05: Well, we're not going to lean too heavily on a treasury regulation today, but the IRS has thought this through and has come up with examples of administrative and judicial actions for the purposes of interpreting the statute. [00:17:27] Speaker 05: The administrative action regulation defines [00:17:31] Speaker 05: such actions as, for example, an examination, a collection proceeding, a status determination proceeding, or a criminal investigation. [00:17:39] Speaker 05: Not merely the first communication in any of those or the predicate or predecessor communication to any of those, but the actual initiation of the proceeding. [00:17:47] Speaker 05: And that's instructive, I think, because the action is more than just calling you and saying, hmm, you think something might be going on. [00:17:57] Speaker 05: There needs to be proceedings. [00:18:00] Speaker 02: But what if the role [00:18:01] Speaker 02: stop short of saying that calling the taxpayer is sufficient for tax court jurisdiction? [00:18:08] Speaker 02: What if the rule said calling the taxpayer is at a minimum necessary for tax court jurisdiction? [00:18:17] Speaker 05: I think we are diverging a little from the text of the statute. [00:18:21] Speaker 05: I understand what you're trying to do and empathize. [00:18:24] Speaker 05: It's the Treasury regulation undertook to solve the same problem. [00:18:29] Speaker 05: But the challenge we have [00:18:31] Speaker 05: is that the statute refers to an action with an antecedent provision in the statute that doesn't define an action. [00:18:39] Speaker 05: So there is some play there, but an action has a common meaning. [00:18:43] Speaker 05: And it needs to mean some sort of proceeding more than simply moving, taking the first step. [00:18:52] Speaker 05: And there must be, in fact, a line drawing exercise there. [00:18:57] Speaker 05: I mean, when does a civil action start when you file a complaint? [00:18:59] Speaker 05: So you can say, well, the complaint [00:19:01] Speaker 05: Is the complaint the action? [00:19:03] Speaker 05: No, but it's where the action initiates. [00:19:04] Speaker 05: And if you want to frame a rule that way, like what is the absolute necessary minimum prerequisite condition to meet the statutory criterion of an action, that is a more challenging line to draw in an administrative proceeding where possibly there is already an audit underway. [00:19:22] Speaker 02: And I take the point about the text of the statute. [00:19:26] Speaker 02: I think we're not drawing, we're not writing on a completely blank slate. [00:19:31] Speaker 02: Lee is, I think Lee ties our hands to some degree, for better or worse, maybe, maybe for the better. [00:19:38] Speaker 02: Shands, again, for better or worse, maybe for the better, and perhaps the jurisdictional part, Lee Sack ties our hands. [00:19:46] Speaker 02: In light of that, I don't think, I think we don't have to say today, we have one great brand unifying theory for what is an administrative action against a taxpayer. [00:19:59] Speaker 02: We could just say what's not. [00:20:02] Speaker 02: And I think what I'm hearing is that it's never going to be an administrative action against a taxpayer when the taxpayer has not been contacted by the IRS. [00:20:16] Speaker 05: Again, I would be reluctant to draw that rule categorically because of the taxpayers who are already subject to administrative actions. [00:20:25] Speaker 05: It's a challenging line to draw because of the way these administrative proceedings. [00:20:29] Speaker 02: And they would still have to be notified, or maybe not. [00:20:31] Speaker 02: They would still have to be notified of an expansion of the audit? [00:20:35] Speaker 05: Well, they wouldn't necessarily be notified of the expansion of the audit. [00:20:38] Speaker 05: And they may not know that whistleblower information is being used in an audit that's currently underway. [00:20:43] Speaker 02: I think you've talked me out of it. [00:20:45] Speaker 05: I'm sorry, I guess. [00:20:49] Speaker 02: You would have won under it, but you might win bigger under a different theory. [00:20:54] Speaker 05: We want us all to be on the same peach here, and we want to get it right. [00:20:58] Speaker 02: The regulation that you mentioned, is that the regulation that Lisa will reconsider? [00:21:01] Speaker 05: It is. [00:21:02] Speaker 02: So is that a reason why we should wait for Lisa? [00:21:06] Speaker 05: It is not, because the definition of an action is not at issue here. [00:21:11] Speaker 05: nor in the case directly previous. [00:21:13] Speaker 02: Sort of. [00:21:14] Speaker 02: It's not. [00:21:14] Speaker 02: I think it is very much an issue whether the things that happened here are administrative actions against the taxpayer. [00:21:21] Speaker 05: It is, but the court need not parse that term very fine to come to the conclusion that a non-prosecution decision is not an action. [00:21:33] Speaker 05: This court's own authority holds that it is not [00:21:35] Speaker 02: 11th circuit is held that it's not specifically in the context of 7623 and heckler versus cheney about claim three uh where you said that there is tax court jurisdiction but then today and i don't blame you for taking the the offer of an even bigger win but today you said maybe there's not tax court jurisdiction isn't that [00:21:59] Speaker 05: Our interpretation of LSAC was that a referral and an action were sufficient to establish jurisdiction. [00:22:08] Speaker 05: And that happened in Kennedy Claim 3. [00:22:12] Speaker 05: That did not happen in Claims Kennedy 1 or 2. [00:22:14] Speaker 05: That did not happen in mining. [00:22:18] Speaker 05: That hinges on this court's reading of LSAC. [00:22:22] Speaker 05: And if this court does not read that as the extent of LSAC's jurisdictional framework, [00:22:29] Speaker 05: but says instead, oh, that was merely a part of it. [00:22:32] Speaker 05: And also a necessary prerequisite for jurisdiction in LISAC was that proceeds were collected and there was simply a dispute as to the origin or attribution of those proceeds. [00:22:42] Speaker 05: Then we would actually look at that claim at Kennedy III and say, we are mistaken in our reading of LISAC. [00:22:52] Speaker 05: where no proceeds are collected and there are undisputably no proceeds collected as a result of that audit, then there would be no jurisdiction there as well. [00:23:00] Speaker 02: I think to do that, we'd have to get around language that I'm about to read from Lisa and not blaming you because I think it's a new theory and maybe a great theory, maybe a correct theory. [00:23:13] Speaker 02: But how would this theory [00:23:19] Speaker 02: be consistent with, I'm at the bottom of 1321, left-hand column of Lisa. [00:23:27] Speaker 02: That referral and examination, no mention of proceeds there, count as the IRS proceeding with an administrative action that was based on the information Lisa brought to the secretary's attention. [00:23:40] Speaker 02: And the determination regarding an award was the whistleblower office letter to Lisa informing him that the examination initiated [00:23:48] Speaker 02: based on the information you provided did not result in the collection of any proceeds proceeds. [00:23:54] Speaker 02: So he was not entitled to an award and I understand there were I guess other proceeds. [00:24:02] Speaker 02: You think we can get around that language. [00:24:05] Speaker 05: Well, we didn't when we wrote our brief. [00:24:09] Speaker 06: I have some other language on this. [00:24:15] Speaker 06: Where the panel says to be sure unless the IRS has made some adjustment, it is unclear what relief a whistleblower could be seeking. [00:24:22] Speaker 06: But the whistleblower office in this case made substantial adjustments, which seems to be relevant. [00:24:28] Speaker 05: May I speak to that? [00:24:33] Speaker 05: that the question of jurisdiction and the question of remedy are not necessarily concentric. [00:24:38] Speaker 05: But in that reading, I can see that's a very reasonable way to align them and say, what is the purpose of exercising this jurisdiction? [00:24:46] Speaker 05: Are you going to be able to make a meaningful difference in the outcome to a whistleblower, or are we just adding litigation costs onto a foregone conclusion where we know that you can't make the IRS go back and do something different that has already been [00:25:01] Speaker 05: confide it to its discretion and completed pursuant to that discretion. [00:25:07] Speaker 05: And I think that's a strong reading of a jurisdictional statute to say we're not going to grant or read this statute to create a grant of jurisdiction that extends beyond our ability to grant relief. [00:25:20] Speaker 02: I think I'm a little uncomfortable with [00:25:25] Speaker 02: any of the theories we've discussed because they're treating some things in B1 as merits and they're treating some things in B1 as jurisdictional. [00:25:35] Speaker 02: I think you would say whether there's been an administrative action, that's jurisdictional. [00:25:41] Speaker 02: Perhaps after today, you would also say whether there's been proceeds, that's jurisdictional. [00:25:47] Speaker 02: But whether the proceeds were based on information from the whistleblower, that's not jurisdiction. [00:25:55] Speaker 02: But we're once again sort of like creating a rule where we are interpreting the statute in a way that puts parts of B1 in some tension with other parts of B1. [00:26:07] Speaker 05: I think the statute has some tension in its drafting. [00:26:12] Speaker 05: We've already in Shands seen resort to a different subsection to B5A [00:26:20] Speaker 05: for the language against any taxpayer, which the court recognizes is necessary to the exercise of its jurisdiction, but is rather a field from the framing in B1. [00:26:32] Speaker 05: This is not a statute that's well disposed to the maxim that all of our jurisdictional ducks should be in a very tight row. [00:26:39] Speaker 02: If Lee and Shands, maybe even Lizette, were not binding, they'd never happened. [00:26:49] Speaker 02: Wouldn't it be something to be said for, sorry, what's up? [00:26:54] Speaker 02: Something to be said, here we go, for saying either all of the elements for an award in B1 are jurisdictional or all of the elements for an award in B1 are not jurisdictional? [00:27:10] Speaker 05: This was our position on brief in LESAC. [00:27:13] Speaker 05: We took the position that they were. [00:27:15] Speaker 02: But even now, I think you're saying, [00:27:19] Speaker 02: the based on language in B one is not jurisdictional. [00:27:25] Speaker 05: The based on does not. [00:27:29] Speaker 05: Let's let's look back at Judge Rouse framing of what's the remedy. [00:27:33] Speaker 05: Did we proceed based on your information? [00:27:35] Speaker 05: That goes to the merits of how much of an award you get. [00:27:38] Speaker 05: If we did not proceed zero based on your information, if the taxpayer was already under audit, if you called and said, Hey, check out [00:27:45] Speaker 05: Amazon's cost of goods sold. [00:27:48] Speaker 05: There's some tip that is congruent with an investigation that's already happening. [00:27:54] Speaker 05: And I don't know anything about Amazon. [00:27:55] Speaker 05: That was an example. [00:27:57] Speaker 05: Then would that create whistleblower jurisdiction over the rejection or denial of that claim? [00:28:05] Speaker 05: Probably not. [00:28:06] Speaker 05: Because whether or not we proceeded based on your information there would be just a small part of that inquiry. [00:28:15] Speaker 05: If you're looking instead at a situation, as in LISAC, where we know you are the but for cause of scrutiny that would not have happened otherwise, and the regulation is kind of framed in this way in the examples, and I think that the Shands opinion also resorted to the against any taxpayer language through that lens, saying what was caused by you here? [00:28:40] Speaker 05: We knew that the whistleblower in Shands had participated [00:28:44] Speaker 05: in or that the secretary had proceeded with judicial actions, investigation or criminal investigations and judicial actions against Swiss bankers that he identified. [00:28:55] Speaker 05: And that was different from the claim that he was litigating in his appeal here in this court. [00:29:00] Speaker 05: But the the elements of the statute giving rise to jurisdiction were potentially present there unrelated to the based on determining [00:29:11] Speaker 05: So this is this is this is a roundabout way of saying that our initial reading of the statute was as a whole and did require many prerequisites to jurisdiction. [00:29:23] Speaker 05: The court we in Leasak we felt had a different reading of it, but we we appreciate a charitable review of the language in Leasak in light of [00:29:34] Speaker 05: subsequent authority. [00:29:35] Speaker 06: Do you think you can read LISAC to allow the based on language to be jurisdictional? [00:29:41] Speaker 06: I'm not sure that LISAC could be read to put the based on. [00:29:48] Speaker 05: I don't think LISAC took a position on that language. [00:29:50] Speaker 05: It certainly was not key to that decision. [00:29:53] Speaker 05: That would definitely be DICTA. [00:29:57] Speaker 05: It was looking at the components of the [00:30:01] Speaker 05: proceeding and not the degree of the whistleblower's contribution, because there it was clear that LISAC was the but for cause. [00:30:09] Speaker 05: And where you get into a grayer area is where but for causation is more difficult to prove. [00:30:18] Speaker 05: If you are providing tips with respect to a taxpayer who's already under audit, who may not know that the IRS [00:30:26] Speaker 05: may or may not be taking any action based on the information you provide, because they're already in contact with the IRS. [00:30:31] Speaker 05: They're already dealing with an audit. [00:30:34] Speaker 05: But if you provide unique knowledge that the IRS did not already have that enables it to apply scrutiny to a taxpayer that it would not have otherwise done, then it is proceeded based on. [00:30:46] Speaker 05: And the proceeds are attributable to you. [00:30:48] Speaker 05: So that goes to proceeds. [00:30:50] Speaker 06: I thought, well, [00:30:53] Speaker 06: I mean, is it not the part of the reasoning of least act that whether attacks, whether whistleblowers information, you know, is responsible for some recovery? [00:31:02] Speaker 06: That's a merits question. [00:31:04] Speaker 06: So isn't that it is saying that whether something is based on the whistleblowers information is a merits question. [00:31:13] Speaker 06: And we would not read it that way. [00:31:15] Speaker 05: We would not deny that it is. [00:31:17] Speaker 05: But we would say that this is one of those instances where [00:31:20] Speaker 05: the jurisdiction and merits questions are concentric, as in tax refund suits, for example, where your entitlement. [00:31:28] Speaker 02: I don't see how you get the holding you get in Leasak, the judgment you get in Leasak, if based on is a jurisdictional requirement. [00:31:41] Speaker 02: And I can walk that through. [00:31:43] Speaker 02: In Leasak, there were proceeds [00:31:50] Speaker 02: and there was an examination, and Lee Sak said, Fort said there was jurisdiction, even though the proceeds were not based on the whistleblower's information. [00:32:09] Speaker 02: So if the proceeds being based on the whistleblower's information were a jurisdictional requirement, [00:32:19] Speaker 02: then there would have been no jurisdiction in Leasak. [00:32:22] Speaker 02: So it seems like it has to be a holding of Leasak that you can get jurisdiction even when the proceeds are not based on the whistleblower information. [00:32:35] Speaker 05: There was a question in Leasak whether they were. [00:32:39] Speaker 05: The question had to do with what was... Well, the question was what was the action that led to the proceeds? [00:32:48] Speaker 05: And Lisa's position was the entire audit of which I was the but for cause is the action that has indisputably led to proceeds, therefore jurisdiction. [00:32:58] Speaker 05: And the government said, no, the action is all or part of an internal revenue service proceeding. [00:33:07] Speaker 05: And we referenced in particular an example in the regulation that said, if the IRS undertakes an administrative action based on your information and [00:33:18] Speaker 05: sees something unrelated and pursues that unrelated to other than the instigation of your information where you're saying look at cost of goods sold and IRS says, oh no, foreign tax credits over here, completely unrelated item, unrelated issue. [00:33:37] Speaker 05: If proceeds are recovered there as they were in LISAC, it was a different issue and a different tax year, then [00:33:45] Speaker 05: That is, under the regulation, a different action over which there is not jurisdiction. [00:33:51] Speaker 02: So if the taxpayer raises a question about whether the proceeds were based on the taxpayer's information, that's good enough for information. [00:34:00] Speaker 02: But if the taxpayer raises a question about whether there was an administrative action, that alone is not good enough for jurisdiction, because there has to actually have been an administrative [00:34:10] Speaker 05: there has to have been an administrative action. [00:34:12] Speaker 05: And I think I want to make sure that the sentence I just completed was correct because I think, uh, I think I talked to myself in a circle. [00:34:19] Speaker 05: Uh, this court found that there was jurisdiction in Lisa based on the action, but found that the action was the, um, it read that the regulation as reasonable under Chevron saying that the [00:34:36] Speaker 05: all or part of language made sense, and that being the but for cause of an audit was not sufficient. [00:34:42] Speaker 05: So where that gets you is there still needs to be an action. [00:34:47] Speaker 05: There needs to be an administrative action. [00:34:49] Speaker 05: Under LSAC, even under Lee, there needs to be some enforcement decision, as Shans praises it. [00:35:00] Speaker 05: Whether that is all of an audit or part of an audit, [00:35:03] Speaker 05: is that goes to the language of the regulation, which the court may yet find, hopefully should find is the best reading of the statute under liberal right. [00:35:11] Speaker 05: But that's not what we're here to discuss today. [00:35:14] Speaker 02: The new theory is even if there is an audit, there still might not be jurisdiction. [00:35:19] Speaker 02: So in the there might not be if there's no proceeds collected. [00:35:23] Speaker 05: If well, this is where this is where based on has to be jurisdictional because otherwise any whistleblower who is adjacent to any large ongoing audit [00:35:33] Speaker 05: can come in and claim jurisdiction by just identifying a taxpayer. [00:35:36] Speaker 02: I guess I might be able to agree with you that the text suggest based on should be jurisdictional. [00:35:41] Speaker 02: And I might be able to agree with you that this theory we explore today requires based on to be jurisdictional. [00:35:49] Speaker 02: But Leasak precludes making based on jurisdiction. [00:35:58] Speaker 05: We don't read it that way. [00:36:00] Speaker 05: We see LSAC as establishing threshold criteria for jurisdiction, but those are floors, not ceilings. [00:36:08] Speaker 02: To me, if based on we're jurisdictional, then in LSAC, there would have been no jurisdiction, but I don't want to monopolize anymore. [00:36:16] Speaker 06: To the extent that based on is a merits question in LSAC, if that is a correct reading of LSAC, then is LSAC inconsistent with Lee? [00:36:28] Speaker 06: Because at the end of Lee, the court says the question in this case asks whether 7623B4 confers jurisdiction only when there is both an IRS action based on whistleblower information and proceeds collected from that action. [00:36:45] Speaker 06: And if LISAC is inconsistent with Lee, then our circuit precedent requires that we follow the first case. [00:36:54] Speaker 05: This was the position that we took on brief in the sack. [00:36:56] Speaker 05: And we believe that late did compel that reason. [00:36:59] Speaker 02: But you lost Lisa, at least on whether there's jurisdiction. [00:37:02] Speaker 02: And so I think Judge Ralph's question is a great one. [00:37:05] Speaker 02: Even though you lost Lisa, can we pretend you didn't lose it? [00:37:09] Speaker 05: The case has been vacated. [00:37:12] Speaker 02: That's not her question. [00:37:12] Speaker 02: But can we even though you lost Lisa, can we nevertheless go with Lee rather than Lisa because Lee came first? [00:37:21] Speaker 05: Uh, it seems that, uh, to the extent that those decisions cannot be reconciled, the earlier one would control and you don't think there's a way to reconcile them? [00:37:31] Speaker 02: Uh, we, this is a risk sounding much more hostile than I mean to be. [00:37:38] Speaker 02: I don't mean this, but I thought your whole brief was a reconciliation of Lee and Lisa. [00:37:42] Speaker 05: Yes. [00:37:43] Speaker 05: And, and, and it has, and we, we, we viewed Lisa as a very nuanced reading of the principles in Lee and the language of the statute. [00:37:51] Speaker 05: But we did not, in our own framing, reach the conclusion that some portion of 7623B1 was more jurisdictional than any other. [00:38:07] Speaker 05: That did come from the court, and we are following that court's precedent in our briefing here and have made the best and most nuanced arguments we can. [00:38:15] Speaker 06: But you think the government's position is that the best meaning is that all of those aspects that you need. [00:38:22] Speaker 06: You know, you need an action. [00:38:24] Speaker 06: It has to be based on the whistleblowers information. [00:38:27] Speaker 06: You need proceeds. [00:38:28] Speaker 06: All of those are jurisdictional. [00:38:30] Speaker 06: That is the government's. [00:38:32] Speaker 05: That was the argument that we made in Lisa. [00:38:34] Speaker 02: Yes. [00:38:35] Speaker 02: And do you now think that that is the best reading? [00:38:39] Speaker 05: Yes, yes, we do. [00:38:45] Speaker 03: Thank you. [00:38:46] Speaker 03: Thank you. [00:38:47] Speaker 03: Uh, just don't start. [00:38:49] Speaker 03: Why don't you take two minutes? [00:39:00] Speaker 04: This court is in need of a clear line for when jurisdiction exists to review, uh, determination on a whistleblower claim. [00:39:09] Speaker 04: And the clear line is there in the text of the statute. [00:39:12] Speaker 04: It's what Congress said. [00:39:14] Speaker 04: And Congress said any determination regarding an award under these paragraphs. [00:39:20] Speaker 04: Lee says, then you look to be one, which says any administrative action. [00:39:24] Speaker 04: It doesn't say any contact with a taxpayer. [00:39:29] Speaker 04: It doesn't say any enforcement decision. [00:39:32] Speaker 04: It doesn't say initiation of some sort of formal proceeding. [00:39:36] Speaker 04: It says any administrative action. [00:39:39] Speaker 04: Congress was careful to make sure that the IRS couldn't shield its actions from review by trying to draw some line around some administrative actions and not around others. [00:39:51] Speaker 04: If they take any administrative action, we look at what they do. [00:39:55] Speaker 04: And if that action falls within the text, then there's jurisdiction. [00:39:59] Speaker 04: And other questions about whether they proceeded to collect proceeds from a taxpayer, those go to the merits. [00:40:07] Speaker 04: And those are the kinds of questions that this court and the tax court have resolved on the merits for many years. [00:40:13] Speaker 02: Ms. [00:40:13] Speaker 02: Stone-Seifer, I do think it matters very much what an administrative [00:40:16] Speaker 02: whether there was an administrative action. [00:40:18] Speaker 02: But I'm struggling to figure out what is an administrative action. [00:40:24] Speaker 02: Can you help me with that, please? [00:40:26] Speaker 04: Yeah. [00:40:27] Speaker 04: So this court actually, in the portion of LISAC that has been vacated, looked at the plain meaning of the language. [00:40:32] Speaker 04: And they said, any administrative action means any action by an agency. [00:40:38] Speaker 04: That's why it's important that it looks to A. So B1 references A. It says, any administrative action described in subsection A. [00:40:46] Speaker 02: I mean, wouldn't that conflict with Lee? [00:40:49] Speaker 02: I mean, they did write a letter in Lee and say, you lose. [00:40:56] Speaker 02: That seems like that would satisfy the definition you just gave of an administrative action. [00:41:02] Speaker 04: Well, it's not an administrative action for the detection of the underpayment of tax. [00:41:08] Speaker 04: And B1 says any administrative action described in subsection A. Subsection A talks about detecting underpayments of tax or identifying a violator of the tax code. [00:41:19] Speaker 04: If you're just looking at the claim itself and whether it was filled out correctly and only information about the whistleblower, you haven't turned to that. [00:41:28] Speaker 02: So any administrative action or the determination of a tax [00:41:35] Speaker 02: I may have bungled. [00:41:36] Speaker 04: That's right. [00:41:36] Speaker 04: That's how I think that that's how I think Lee can be reconciled with the text of the statute. [00:41:42] Speaker 02: And is that the question that Lisa was trying to answer whether the regulation there properly defined? [00:41:51] Speaker 02: What you just said. [00:41:52] Speaker 04: I think Lee Sack was recognizing that the case in that in that that case was different from Lee because it had proceeded past this threshold threshold rejection and was trying to decide whether to and to erect another jurisdictional barrier by looking at the proceeds language in that in B1 and they decided not to go further and they didn't want to reverse Lee Lee is justifiable. [00:42:16] Speaker 04: It can can work with the statute. [00:42:18] Speaker 04: But when you're looking at this next question of [00:42:21] Speaker 04: Do we make this next step also jurisdictional? [00:42:24] Speaker 04: Lisak then looked to the Supreme Court decisions that say, how do we read a statute when we're looking at a jurisdictional question? [00:42:33] Speaker 04: And the Supreme Court's been really clear, even if the readings of the statute are equal, even if the reading that makes it jurisdictional is better, [00:42:41] Speaker 04: That's not enough to read a portion of a statute as jurisdictional. [00:42:46] Speaker 04: It has to be a clear statement. [00:42:49] Speaker 04: And there's certainly no clear statement in subsection B or anywhere that collecting proceeds is jurisdictional, that there's any specific [00:42:59] Speaker 04: type of administrative action that's jurisdictional, such as an examination, that's just not there. [00:43:06] Speaker 04: And it would be inconsistent with the way the Supreme Court and this court talk about jurisdiction to make those things. [00:43:11] Speaker 02: A lot of presidents say we're not imposing a magic words requirement, so you don't have to say jurisdictional in the statute. [00:43:19] Speaker 02: But here it does say jurisdictional. [00:43:24] Speaker 04: Well, B4 does say jurisdiction, but B1 doesn't. [00:43:28] Speaker 02: But B4 incorporates. [00:43:30] Speaker 02: You agree B4 incorporates B1. [00:43:32] Speaker 04: It talks about any determination under B1. [00:43:35] Speaker 04: And Lee has read that to me, and that you have to. [00:43:37] Speaker 04: There are no determinations until you begin with any administrative action. [00:43:43] Speaker 04: And I think that's reasonable. [00:43:44] Speaker 04: But I think in terms of extending that, [00:43:48] Speaker 04: The court needs to think carefully about how clear the text of the statute is about that being a jurisdictional bar. [00:43:59] Speaker 03: All right. [00:43:59] Speaker 03: Ms. [00:43:59] Speaker 03: Stone, we were appointed by the court. [00:44:03] Speaker 03: We thank you for your very, very able assistance. [00:44:07] Speaker 04: Thank you, Your Honor. [00:44:08] Speaker 04: It's been a pleasure.