D.C. Circuit: 30-Day Period for Whistleblower Appeals Is Not Jurisdictional

(Parker Tax Publishing July 2019)

The D.C. Circuit reversed the Tax Court and held that a claimant's failure to appeal a determination of the IRS Whistleblower Office to the Tax Court within the 30-day period provided in Code Sec. 7623(b)(4) did not deprive the Tax Court of jurisdiction because the statute does not clearly state that timely filing is a jurisdictional prerequisite to the Tax Court's hearing the whistleblower case. The D.C. Circuit also held that the 30-day filing period in Code Sec. 7623(b)(4) is subject to equitable tolling and remanded the case to the Tax Court to determine whether equitable tolling was appropriate. Myers v. Comm'r, 2019 PTC 255 (D.C. Cir. 2019).

Background

In 2009, David Myers filed an IRS Form 211, Application for Award for Original Information with the IRS Whistleblower Office. He alleged his former employer had intentionally misclassified him and other employees as independent contractors in order to avoid paying workers compensation and employee benefits. Myers sought a monetary award under Code Sec. 7623(b).

In a letter dated March 13, 2013, the Whistleblower Office denied Myers's claim. The letter stated that Myers was not eligible for an award because the information he provided did not result in the collection of any proceeds. On March 27, 2013, Myers sent a fax to the Whistleblower Office stating that he had inexplicably received a letter denying his claim. Myers continued sending correspondence to the Whistleblower Office, which responded in four more letters, the last of which was dated April 11, 2014. The letters stated that the Whistleblower Office had considered the additional information Myers provided and determined that his claim still did not meet the criteria for an award. Myers also corresponded with other government officials, including through emails to then-IRS Chief Counsel William Wilkins, out of frustration with the Whistleblower Office.

On January 20, 2015, Myers petitioned the Tax Court to appeal the Whistleblower Office's denial of his claim. The IRS moved to dismiss the petition for lack of jurisdiction on the ground that it was not timely filed under Code Sec. 7623(b)(4), which states that any determination regarding a whistleblower award "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)."

In Myers v. Comm'r, 148 T.C. No. 20 (2017), the Tax Court dismissed Myers's claim for lack of jurisdiction. The Tax Court found that Myers was notified of the Whistleblower Office's adverse determination no later than April 11, 2014. On June 25, 2017, Myers filed a motion for reconsideration. The Tax Court denied Myers's motion on July 13, 2017. Myers appealed to the D.C. Circuit on September 21, 2017, 106 days after the Tax Court entered its order dismissing his case and 70 days after it had denied his motion for reconsideration.

D.C. Circuit's Analysis

The D.C. Circuit reversed the Tax Court and remanded the case for further proceedings. The D.C. Circuit concluded that, although Myers's petition was untimely, the filing period in Code Sec. 7623(b)(4) is not jurisdictional and is therefore subject to equitable tolling.

First, the D.C. Circuit determined that it had jurisdiction over Myers's appeal, even though Myers filed his appeal after the expiration of the 90-day period for appeals from the Tax Court under Rule 13 of the Federal Rules of Appellate Procedure and Code Sec. 7483. The court explained that under Rule 13, if a party files a "motion to vacate or revise" a Tax Court decision, the 90-day period for appeals runs from the later of the entry of the order disposing of the motion or the entry of a new decision. The D.C. Circuit held that a motion for reconsideration was the functional equivalent of a motion to vacate or revise, and should be treated as such for the purpose of determining timeliness.

Turning to the Tax Court's jurisdiction over Myers's petition, the D.C. Circuit held that Myers's appeal was untimely because the IRS's written notices to Myers constituted a determination for the purpose of Code Sec. 7623(b)(4). According to the D.C. Circuit, there was no requirement that the Whistleblower Office provide Myers with any information other than that he did not qualify for an award. The court rejected Myers's argument that the Whistleblower Office had to include additional information specified in Reg. Sec. 301.7623-1 and Reg. Sec. 301.7623-3 because those regulations were not yet in effect when Myers filed his claim.

Observation: The D.C. Circuit shared the Tax Court's concern that the consistent lack of information in determination letters sent by the Whistleblower Office about a claimant's right to appeal is not only inconsistent with the IRS's practice in other areas but also can be prejudicial to claimants, especially given the 30-day period for appeals. However, the D.C. Circuit said that it would not craft requirements out of whole cloth and concluded that it was enough in this case that the letters notified Myers of the Whistleblower Office's final decision on his claim.

Next, the D.C. Circuit found that, although Myers's petition was filed outside of the 30-day period specified in Code Sec. 7623(b)(4), Myers' failure to timely file his appeal did not deprive the Tax Court of jurisdiction. The D.C. Circuit explained that, in Gonzalez v. Thaler, 565 U.S. 134 (2012), the Supreme Court distinguished between truly jurisdictional rules and nonjurisdictional claim-processing rules. According to the Supreme Court, a time bar is jurisdictional only if the statute includes a clear statement that expressly refers to subject matter jurisdiction or speaks in jurisdictional terms. Applying this rule, the D.C. Circuit found that Code Sec. 7623(b)(4) contains in a single sentence a timing requirement and a grant of jurisdiction to the Tax Court, but nothing in the statute conditions the jurisdictional grant on the limitations period or otherwise links the separate clauses. The D.C. Circuit said that the Supreme Court demands a high degree of clarity. Congress must make unmistakable its intent to deprive the Tax Court of its authority to hear an untimely petition, according to the D.C. Circuit.

The D.C. Circuit noted that it was the first to decide whether Code Sec. 7623(b)(4) is jurisdictional and recognized that its holding is in tension with that of another circuit regarding a similarly worded statute. In Duggan v. Comm'r, 2018 PTC 4 (2018), the Ninth Circuit affirmed a Tax Court decision holding that Code Sec. 6330(d)(1), which governs appeals from collection due process hearings and contains nearly identical language to Code Sec. 7623(b)(4), is jurisdictional. Nevertheless, the D.C. Circuit could not agree that the timely filing of a 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.

Finally, the D.C. Circuit determined that the 30-day filing period in Code Sec. 7623(b)(4) is subject to equitable tolling. The court said that a nonjurisdictional federal statute of limitations is normally subject to a rebuttable presumption in favor of equitable tolling which can be rebutted only if there is good reason to believe that Congress did not want equitable tolling to apply. The D.C. Circuit found no evidence of such legislative intent with respect to Code Sec. 7623(b)(4).

Observation: In a dissenting opinion, one judge thought that, based on the language and structure of Code Sec. 7623(b)(4), Congress clearly expressed its intent to make the time bar jurisdictional.

For a discussion of the rules for appealing a whistleblower determination, see Parker Tax ¶262,330.

Disclaimer: This publication does not, and is not intended to, provide legal, tax or accounting advice, and readers should consult their tax advisors concerning the application of tax laws to their particular situations. This analysis is not tax advice and is not intended or written to be used, and cannot be used, for purposes of avoiding tax penalties that may be imposed on any taxpayer. The information contained herein is general in nature and based on authorities that are subject to change. Parker Tax Publishing guarantees neither the accuracy nor completeness of any information and is not responsible for any errors or omissions, or for results obtained by others as a result of reliance upon such information. Parker Tax Publishing assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect information contained herein.

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