D.C. Circuit Vacates Tax Court's Judgment in Whistleblower Appeal

(Parker Tax Publishing June 2025)

The D.C. Circuit vacated a Tax Court judgment holding that an individual's petition to review the rejection of his whistleblower claim by the IRS Whistleblower Office (WBO) was barred by the statute of limitations. The D.C. Circuit found that the Tax Court lacked jurisdiction because the petitioner failed to establish or allege that the IRS took any action against a taxpayer based on the information he provided to the WBO and therefore remanded to the Tax Court with instructions to dismiss the petition for lack of jurisdiction. Myers v. Comm'r, 2025 PTC 201 (D.C. Cir. 2025).

Background

In August 2009, David Myers applied for an award from the IRS Whistleblower Office (WBO), alleging that his former employer owed additional taxes because it incorrectly categorized him and other employees as independent contractors instead of employees. The WBO rejected his claim. In a denial letter, the WBO stated that the information Myers provided "did not result in the collection of any proceeds" and therefore he was "not eligible for an award" because "an award may be paid only if the information provided results in the collection of additional tax, penalties, interest or other proceeds."

In January 2015 - almost two years after the denial of Myers's claim and his acknowledgment of the denial - Myers petitioned the Tax Court to review the rejection of his whistleblower application. He stated that the IRS had "never audited" his former employer and asked the Tax Court to mandate such an audit. Although his petition was untimely, Myers asked the court to "estop any motion by the IRS to dismiss my case due to the expiration of the statute of limitations, or for lack of jurisdiction, or for any reason."

In Myers v. Comm'r, 148 T.C. 438 (2017), the Tax Court dismissed Myers's petition for lack of jurisdiction due to its untimeliness. Myers appealed that dismissal to the D.C. Circuit. In Myers v. Comm'r, 2019 PTC 255 (D.C. Cir. 2019), the D.C. Circuit agreed with the Tax Court that Myers's petition was untimely. But the D.C. Circuit disagreed that the statute of limitations was jurisdictional and remanded for the Tax Court to decide whether Myers was entitled to equitable tolling.

On remand, Myers argued that his petition was timely. He also argued that the for-cause removal protections afforded Tax Court judges under Code Sec. 7443(f) are unconstitutional. The Tax Court again dismissed Myers's petition. It declined to equitably toll the statute of limitations and it rejected Myers's claim that the court's structure is unconstitutional. Myers again appealed to the D.C. Circuit.

Under Code Sec. 7623(b), the Tax Court's jurisdiction to review a petition challenging a whistleblower award determination arises only when the IRS proceeds with an administrative or judicial action against a taxpayer based on information brought to the IRS's attention by the whistleblower. Code Sec. 7623(b)(4) gives the Tax Court jurisdiction to review "any determination regarding an award." In Li v. Comm'r, 2022 PTC 8 (D.C. Cir. 2022), the D.C. Circuit held that the WBO makes a "determination" only when the IRS "proceeds" with an action against a taxpayer.

Analysis

The D.C. Circuit held that Myers failed to carry his burden to establish the Tax Court's jurisdiction over his whistleblower claim under Code Sec. 7623(b)(4). The court therefore vacated the Tax Court's judgment and remanded with instructions to dismiss Myers's petition for lack of jurisdiction.

The D.C. Circuit found that Myers did not establish or allege that the IRS "proceeded" with any action against a taxpayer based on the information that he provided. The court noted that, in fact, Myers made a contrary allegation in his petition to the Tax Court by asserting that the IRS "never audited" his former employers to verify his information. The D.C. Circuit concluded that, because Myers's petition did not establish or even allege that the information he provided caused the IRS to proceed with an administrative or judicial action against a taxpayer, the Tax Court did not have jurisdiction under Code Sec. 7623(b)(4) to review the IRS's rejection of his whistleblower application. Accordingly, the D.C. Circuit found that it lacked jurisdiction to review Myer's merits arguments regarding equitable tolling and the constitutionality of the removal protections for Tax Court judges.

The D.C. Circuit noted that its decision in Lissack v. Comm'r, 2025 PTC 12 (D.C. Cir. 2025), is not to the contrary. In Lissack, the D.C. Circuit held that the Tax Court had jurisdiction over Lissack's petition even though the IRS concluded that the information he provided did not lead to a collection of proceeds because there was "no dispute" that the IRS "proceed[ed] with" an "administrative action" based on his proffered information. By contrast, Myers did not allege that the IRS "proceeded" with any investigative or administrative action at all.

The court also denied Myers's request for a remand so that he could obtain jurisdictional discovery. In his reply brief, Myers argued that "there is no suggestion" that his information "did not trigger proceedings" and that, if anything, the WBO's stated reasons for his award denial - that he was ineligible because his information "did not result in proceeds" - implied that proceedings did in fact occur. The D.C. Circuit found that argument to be directly contradictory to the allegations and relief requested in Myers's petition, where he stated that the IRS had "never audited" his former employers. The court concluded that, since Myers made allegations that taken as true foreclosed the court's jurisdiction, granting him jurisdictional discovery was unwarranted.

For a discussion of appealing a whistleblower determination, see Parker Tax ¶262,340.

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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