For tax whistleblowers, deciding whether to go to Tax Court is a major decision. As I’ve written previously there are a number of factors that go into deciding whether it makes sense to go to Tax Court for a whistleblower case. Moreover, two recent court decisions have provided clarity on that decision – and have also been helpful in improving discovery for whistleblowers in Tax Court.
In general, good candidates for Tax Court are those cases where the whistleblower has some belief/confidence that the IRS took action (or related action) against the taxpayer (or related taxpayer) based on information provided by the whistleblower – which resulted in collected proceeds.
Threshold Requirements For Tax Court Jurisdiction Of Whistleblower Cases – The Li Case
In the recent case of Li v. Commissioner, 22 F.4th 1014 (D.C. Cir. 2022) the D.C. Circuit Court of Appeals addressed the question of when the Tax Court would have jurisdiction of a whistleblower case. In short, can the whistleblower even have her case heard by the Tax Court?
The facts in Li (undisputed by the whistleblower) were that the whistleblower’s submission was rejected by the WBO classifier and was never sent to the field. In short, the whistleblower’s Form 211 was subject to a threshold rejection – essentially that the filing never got of the box and was never sent to the field for consideration and therefore no action was taken by the IRS (and certainly no collected proceeds).
In short, the Circuit Court’s...
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