Doyle Case Paves the Way on How to Show Abuse of Discretion in WB Cases12 / 07 / 2020
Doyle v. Commissioner, T.C. Memo 2020-139 (10/8/2020)
IRS Whistleblowers may be a bit emboldened by a recent decision of the United States Tax Court, finding that the IRS WBO committed an "abuse of discretion."
There were two asserted claims made by the IRS whistleblower in the Doyle case. First, a claim that summary judgment should not be awarded to the IRS because there were facts to assert that the IRS WBO had committed an abuse of discretion when choosing not to act on the claim. Second, a claim that summary judgment should not be awarded to the IRS because there were facts to suggest that the criminal investigation division of the IRS had, in fact, worked with the IRS whistleblower in the pursuit of the claim.
In the case, the Tax Court ruled that the whistleblower erred in contending that an abuse of discretion can be asserted as to any decision reached not to act on any claim.
However, the Tax Court also ruled that in cases where the IRS whistleblower has reason to know that he or she is working with the Criminal Investigation Division, it can't be appropriate for the IRS WBO to summarily deny a Form 211 submision when there is evidence that the IRS CID are investigating a matter.
The bottom line: If a factual dispute exists as to whether the IRS CID did (or did not) investigate the identified target, then the IRS should not expect to obtain summary judgment with respect to the matter.
Unfortunately, whistleblowers are often unable to "prove" what they think is going on. However, in Doyle, the Tax Court reviewed a WBO e-mail sent to the IRS CID, presumably obtained in discovery (or which was part of the administrative record). This e-mail from the IRS WBO asked, Can you please confirm that IRS CID is not working with these WBs on any investigation involving the target TE companies?
The Tax Court noted that the IRS CID responded to this e-mail, with a non-answer, "the claim was appropriately declined by criminal investigation." This led the Tax Court to conclude that the administrative record, consisting of WB's detailed allegations and the non-response, fails to support the WBO's conclusion that CID had not proceeded based on Petitioner's information.
If you have any questions about a IRS whistleblower matter, please contact Mr. Tufts at 407-647-7887.