146 T.C. No. 6
UNITED STATES TAX COURT
WHISTLEBLOWER 22716-13W, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 22716-13W. Filed March 14, 2016.
P filed Form 211, Application for Award for Original Infor-
mation, with the IRS Whistleblower Office with respect to TP1. By
guilty plea, TP1 agreed to pay an FBAR civil penalty substantially in
excess of $2,000,000 and a small amount of restitution, reflecting
unpaid Federal income tax on income derived from Swiss bank
accounts.
A whistleblower is eligible for a nondiscretionary award under
I.R.C. sec. 7623(b) only “if the tax, penalties, interest, additions to
tax, and additional amounts in dispute exceed $2,000,000.” I.R.C.
sec. 7623(b)(5)(B). FBAR civil penalties are imposed and collected
under 31 U.S.C. sec. 5321 (2006), not under the Internal Revenue
Code. R contends that FBAR payments do not constitute “additional
amounts” for purposes of ascertaining whether the $2,000,000
threshold has been met.
1. Held: The term “additional amounts” as used in I.R.C. sec.
7623(b)(5)(B) means the civil penalties set forth in c. 68, subch. A, of
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the Internal Revenue Code, captioned “Additions to the Tax and
Additional Amounts.”
2. Held, further, FBAR civil penalties are not “additional
amounts” within the meaning of I.R.C. sec. 7623(b)(5)(B), and they
are not “assessed, collected, * * * [or] paid in the same manner as
taxes.” I.R.C. sec. 6665(a)(1). FBAR payments must therefore be
excluded in determining whether the $2,000,000 “amount in dispute”
requirement has been satisfied.
Robert F. Katzburg and William M. Sharp, for petitioner.*
Ashley M. Bender and John T. Arthur, for respondent.
OPINION
LAUBER, Judge: This whistleblower award case is before the Court on a
motion for summary judgment filed by the Internal Revenue Service (IRS or re-
spondent). A whistleblower is eligible for a nondiscretionary award under section
7623(b) only “if the tax, penalties, interest, additions to tax, and additional
amounts in dispute exceed $2,000,000.” Sec. 7623(b)(5)(B).1 The IRS collected
*
Brief amicus curiae was filed by Dean Zerbe and Stephen M. Kohn as
attorneys for the National Whistleblowers Center.
1
All statutory references are to the Internal Revenue Code (Code or Title 26)
in effect at the relevant times, and all Rule references are to the Tax Court Rules of
Practice and Procedure. All dollar amounts are rounded to the nearest dollar.
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from the taxpayer who is the subject of this whistleblower claim a multi-million-
dollar civil penalty for failing to file Form TD F 90-22.1, Report of Foreign Bank
and Financial Accounts (Foreign Bank Account Report or FBAR), under 31
U.S.C. sec. 5321(a) (2006). The question we must decide is whether this FBAR
payment constitutes an “additional amount” for purposes of ascertaining whether
the $2,000,000 threshold has been met. We hold that it does not. We will accord-
ingly grant respondent’s motion for summary judgment.
Background
Petitioner in 2010 filed Form 211, Application for Award for Original Infor-
mation, with the IRS Whistleblower Office (Office).2 On the application he assert-
ed that he was cooperating with the Department of Justice and the IRS Criminal
Investigation Division in connection with the ongoing investigation of two Swiss
bankers, Martin Lack and Renzo Gadola. Petitioner alleged that his cooperation
with those agencies had led to, and would lead to more, information about these
bankers’ involvement in tax evasion by U.S. persons having undeclared offshore
2
The Court granted petitioner’s motion to proceed anonymously. In an ef-
fort to preserve petitioner’s anonymity, the parties in their briefs and other filings
refer to the U.S. taxpayer who is the subject of the relevant whistleblower claim as
“Taxpayer 1.” We will employ the same convention in this Opinion. When refer-
ring to Taxpayer 1 and to petitioner, we will employ the masculine pronoun and
possessive adjective without intending to create any implication concerning the
gender of either person.
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financial accounts. The Office notified petitioner that it had received the Form
211 and had assigned unique claim numbers to his claims regarding the two
bankers.
On August 23, 2011, petitioner filed with the Office a third claim for an
award, which is the subject of the present controversy. Petitioner filed this claim
after learning that Taxpayer 1 had agreed to pay a substantial penalty in conjunc-
tion with a guilty plea for filing a false tax return. Taxpayer 1 admitted that
Gadola had helped him open Swiss bank accounts to conceal his income and as-
sets from U.S. authorities. By the guilty plea, Taxpayer 1 agreed to pay an FBAR
civil penalty substantially in excess of $2,000,000 and a small amount of restitu-
tion, reflecting unpaid Federal income tax on income derived from the Swiss bank
accounts. Petitioner claimed entitlement to an award based upon the aggregate
amount paid by Taxpayer 1, given petitioner’s alleged involvement in Gadola’s
arrest, which allegedly led to Taxpayer 1’s arrest.
During its review of the Taxpayer 1 claim, the Office informed petitioner
that it had received a legal opinion from the IRS Office of Chief Counsel conclud-
ing that FBAR penalty payments, because they are made pursuant to Title 31 ra-
ther than Title 26 of the U.S. Code, are not “collected proceeds” eligible for a non-
discretionary award under section 7623(b)(1). See Scope of Awards Payable
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Under I.R.C. Section 7623, PMTA 2012-10. Viewing this as a de facto denial of
his Taxpayer 1 claim, petitioner sought immediate review in this Court. We grant-
ed respondent’s motion to dismiss that case for lack of jurisdiction, concluding
that the Office had not made, as of the time petitioner filed that petition, a “deter-
mination regarding an award” sufficient to confer jurisdiction on this Court. See
Whistleblower 22231-12W v. Commissioner, T.C. Memo. 2014-157.
On September 6, 2013, the Office issued petitioner a final determination let-
ter informing him that his Taxpayer 1 claim had been denied. The letter stated two
grounds for the denial: (1) the Government had obtained complete information
about Taxpayer 1’s offshore accounts directly from the Swiss bank, without any
assistance from petitioner; and (2) petitioner in any event could not qualify for a
nondiscretionary award because his claim did not meet the $2,000,000 threshold.
Believing that FBAR payments do not constitute “tax, penalties, interest, additions
to tax, * * * [or] additional amounts” within the meaning of section 7623(b)(5)(B),
the Office concluded that the amount in dispute with respect to the Taxpayer 1
claim, resolving all doubts in petitioner’s favor, could not exceed $50,000.
Petitioner timely petitioned this Court for review of this determination deny-
ing his award. Respondent filed an answer raising the section 7623(b)(5)(B) dol-
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lar threshold as an affirmative defense.3 On May 29, 2015, respondent moved for
summary judgment on the basis of petitioner’s alleged failure to satisfy section
7623(b)(5)(B). The Court has received thorough briefing from the parties on this
subject, as well as a brief amicus curiae from the National Whistleblowers Center
(NWC), to which both parties have responded.
Discussion
I. Standard of Review
The purpose of summary judgment is to expedite litigation and avoid un-
necessary and expensive trials. See FPL Grp., Inc. & Subs. v. Commissioner, 116
T.C. 73, 74 (2001). We may grant summary judgment when there is no genuine
dispute concerning any material fact and a decision may be rendered as a matter of
law. Rule 121(b); Elec. Arts, Inc. v. Commissioner, 118 T.C. 226, 238 (2002).
The parties agree on all questions of fact affecting the application of section
7623(b)(5)(B), and the proper interpretation of that provision presents a pure
3
Respondent initially moved to dismiss this case for lack of jurisdiction,
contending that the section 7623(b)(5)(B) “amount in dispute” requirement was
jurisdictional. This Court subsequently rejected that argument in Lippolis v.
Commissioner, 143 T.C. 393, 397 (2014), holding that section 7623(b)(5)(B)
affords the IRS only an affirmative defense. On April 6, 2015, respondent moved
to withdraw his motion to dismiss for lack of jurisdiction, citing this Court’s hold-
ing in Lippolis, and we granted that motion. Respondent filed his answer on April
6, 2015, raising as an affirmative defense that petitioner’s claim does not satisfy
the $2,000,000 requirement.
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question of law. We conclude that the question presented by respondent’s motion
is appropriate for summary adjudication.4
II. Governing Statutory Framework
A. The Whistleblower Statute
The IRS has long had authority to pay awards to persons, now called “whis-
tleblowers,” who provide information leading to the recovery of unpaid taxes. The
Code now provides for two types of whistleblower awards: discretionary and non-
discretionary. The former derive from legislation enacted in 1867, which author-
ized the Secretary “to pay such sums * * * as may in his judgment be deemed
necessary for detecting and bringing to trial and punishment persons guilty of
violating the internal revenue laws, or conniving at the same.” Act of Mar. 2,
1867, ch. 169, sec. 7, 14 Stat. at 473. This provision, reenacted without much
change as section 7623(a), authorizes the IRS to pay such sums as it “deems
necessary” and mandates that such payments “shall be paid from the proceeds of
4
Respondent has not sought summary judgment on his alternative basis for
denying petitioner’s claim, namely, that petitioner’s information did not “substan-
tially contribute to” the recovery from Taxpayer 1. See sec. 7623(b)(1); Whistle-
blower One 10683-13W, 145 T.C. __, __ (slip op. at 5) (Sept. 16, 2015) (noting
that whistleblowers are entitled to an award only if there was a collection of
proceeds “attributable in some way to the information that * * * [they] provided”).
Because we rule for respondent under section 7623(b)(5)(B), we need not address
his alternative basis for denial, which appears to raise at least one dispute of
material fact.
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amounts collected.” The IRS’ determinations with respect to these discretionary
awards are not subject to judicial review. See, e.g., DaCosta v. United States, 82
Fed. Cl. 549 (2008); Conner v. United States, 76 Fed. Cl. 86 (2007); Destefano v.
United States, 52 Fed. Cl. 291 (2002); see also Lippolis v. Commissioner, 143
T.C. 393, 399 (2014); Whistleblower 11332-13W v. Commissioner, 142 T.C. 396,
400 (2014).
The second type of whistleblower award, set forth in section 7623(b), was
introduced by the Tax Relief and Health Care Act of 2006, Pub. L. No. 109-432,
sec. 406, 120 Stat. at 2958-2960. Section 7623(b) provides for nondiscretionary
(i.e., mandatory) awards if specified dollar thresholds and other requirements are
met. Under section 7623(b)(5), a whistleblower is eligible for a nondiscretionary
award with respect to any action--
(A) against any taxpayer, but in the case of any individual, only
if such individual’s gross income exceeds $200,000 for any taxable
year subject to such action, and
(B) if the tax, penalties, interest, additions to tax, and additional
amounts in dispute exceed $2,000,000.
If these monetary thresholds are met and the Government recovers “collect-
ed proceeds” attributable to the whistleblower’s information, the whistleblower
will, subject to certain conditions, receive an award. This award will be “at least
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15 percent but not more than 30 percent of the collected proceeds (including pen-
alties, interest, additions to tax, and additional amounts) resulting from the action
(including any related actions) or from any settlement in response to such action.”
Sec. 7623(b)(1); see Cooper v. Commissioner, 136 T.C. 597, 600 (2011). If a
claim does not satisfy the dollar thresholds of section 7623(b)(5), the IRS retains
discretion to pay an award under subsection (a), but it is not required to pay an
award under subsection (b).
B. FBAR Civil Penalties
Congress passed the Bank Secrecy Act (BSA), 31 U.S.C. secs. 5311-5332
(2006), to advance a variety of regulatory and investigative objectives, including
detection and prosecution of criminal activity and enforcement of laws under the
jurisdiction of the Department of the Treasury. See id. sec. 5311; United States v.
Simonelli, 614 F. Supp. 2d 241, 241 (D. Conn. 2008). The BSA requires (among
other things) that U.S. persons who have interests in (or authority over) bank or
financial accounts in foreign countries must report information about those
accounts to the Federal Government. An FBAR is the required vehicle for making
this disclosure. As relevant here, U.S. persons who hold one or more foreign
financial accounts with an aggregate value exceeding $10,000 must file an FBAR
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with the Commissioner reporting the existence and value of the accounts. See 31
U.S.C. sec. 5314(a); 31 C.F.R. secs. 1010.350, 1010.306(c) (2011).
While “the obligation to file an FBAR arises under Title 31, individual tax-
payers subject to the FBAR reporting requirements are alerted to this requirement
in the preparation of annual Federal income tax returns.” Staff of J. Comm. on
Taxation, Technical Explanation of H.R. 4213, JCX-60-09, at 144 (Dec. 8, 2009).
The Form 1040, U.S. Individual Income Tax Return, currently includes at the
bottom of Schedule B, Interest and Ordinary Dividends, the following question:
“At any time during * * * [the taxable year] did you have a financial interest in or
signature authority over a financial account (such as a bank account, securities
account, or brokerage account) located in a foreign country?” A taxpayer who
checks the “yes” box is directed to instructions concerning his obligation “to file
* * * Report of Foreign Bank and Financial Accounts (FBAR), to report that
financial interest or signature authority.”5
The BSA requires covered persons to file the FBAR with the Department of
the Treasury, but not to remit money or property. The FBAR form specifically in-
5
During the period relevant to this case, individuals were required to make
FBAR reports on TD F 90-22.1, a Department of the Treasury form. On
September 30, 2013, the Department’s Financial Crimes Enforcement Network
(FinCEN) announced that FBAR reports would thenceforth be made on FinCEN
Report 114. Form 1040, Schedule B, now refers taxpayers to the latter form.
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structs filers: “Do NOT file with your Federal Tax Return.” As relevant here, the
BSA imposes no pecuniary burden on covered persons, only the requirement that
they file an FBAR.
A person who fails to file a required FBAR may be assessed a civil
monetary penalty. 31 U.S.C. sec. 5321(a)(5)(A). The amount of the penalty is
capped at $10,000 unless the failure was willful. See id. subparas. (B)(i), (C). If
the failure was willful, the maximum penalty increases to $100,000 or half the
value of the foreign bank account at the time of the violation, whichever is greater.
Ibid. In either case, whether to impose the penalty and the amount of the penalty
are committed to the discretion of the Secretary. See id. subpara. (A) (“The
Secretary of the Treasury may impose a civil money penalty[.]”); id. subpara. (B)
(“the amount of any civil penalty * * * shall not exceed” the statutory ceiling).
The FBAR civil penalty may be assessed “at any time before the end of the
six-year period beginning on the date of the transaction with respect to which the
penalty is assessed.” 31 U.S.C. sec. 5321(b)(1). The Government may commence
a civil action to recover an assessed FBAR penalty at any time before the end of
the two-year period beginning on the later of (a) the date the penalty was assessed
or (b) the date any judgment becomes final in a related criminal action. See id.
para. (2); United States v. Williams, 489 F. App’x 655 (4th Cir. 2012); Moore v.
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United States, 2015 WL 1510007 (W.D. Wash. Apr. 1, 2015); United States v.
McBride, 908 F. Supp. 2d 1186 (D. Utah 2012).
Authority to enforce BSA requirements, including imposition of FBAR civil
penalties, was initially delegated to the Financial Crimes Enforcement Network
(FinCEN), a bureau of the Department of the Treasury. FinCEN’s overall mission
is to collect and analyze information about financial transactions in order to
combat money laundering, terrorist financing, and other financial crimes. See 31
U.S.C. sec. 5311; Simonelli, 614 F. Supp. 2d at 241. Through a memorandum of
agreement between FinCEN and the IRS, authority to administer the FBAR regime
has been redelegated to the Commissioner. See 31 C.F.R. sec. 1010.810(g)
(2011). The Secretary recommended this redelegation in part because “the FBAR
is directed more towards tax evasion, as opposed to money laundering or other
financial crimes, that lie at the core mission of FinCEN.” FinCEN, Report to
Congress in Accordance with Section 361(b) of the USA PATRIOT Act, at 4
(Apr. 24, 2003).
The authority thus delegated to the Commissioner is broad, giving the IRS
the power to assess and collect civil penalties for noncompliance with FBAR re-
quirements, investigate possible violations, employ summons power, issue admin-
istrative rulings, and take “any other action reasonably necessary” to implement
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and enforce the FBAR regime. 31 C.F.R. sec. 1010.810(g); see also FinCEN,
Report to Congress in Accordance with Section 361(b) of the USA PATRIOT Act,
at 5 (Apr. 8, 2005) (delegation allows IRS “to create interpretive education out-
reach materials for the FBAR, revise the form and instructions, examine indivi-
duals and other entities, and assess civil penalties for violations”).
III. Analysis
A. “Additional Amounts”
Section 7623(b)(5) makes a whistleblower eligible for a nondiscretionary
award only if his claim satisfies two monetary thresholds. The parties appear to
agree that Taxpayer 1’s gross income exceeded $200,000. See sec. 7623(b)(5)(A).
In order to prevail, therefore, petitioner must show that “the tax, penalties, interest,
additions to tax, and additional amounts in dispute exceed $2,000,000” with re-
spect to his Taxpayer 1 claim. See sec. 7623(b)(5)(B). Petitioner does not
contend that FBAR payments constitute “tax,” “interest,” or “additions to tax,” nor
does he contend that they are “penalties” under the Internal Revenue Code. The
focus of the parties’ dispute, and the question we must decide, is whether FBAR
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payments constitute “additional amounts” within the meaning of section
7623(b)(5)(B).6
In deciding the proper interpretation of “additional amounts” as used in this
section, the starting point is the language of the statute. Greyhound Corp. v. Mt.
Hood Stages, Inc., 437 U.S. 322, 330 (1978). Where Congress uses a term of art
that has acquired an established meaning over a long period, Congress presumably
intends that meaning when it uses that term. See, e.g., Morissette v. United States,
342 U.S. 246, 263 (1952); cf. Direct Mktg. Ass’n v. Brohl, 571 U.S. __, __, 135 S.
Ct. 1124, 1129-1130 (2015) (applying this principle to define for tax purposes the
terms “assessment,” “levy,” and “collection”); 1836 S St. Tenants Ass’n, Inc. v.
Estate of B. Battle, 965 A.2d 832, 839 (D.C. 2009) (“When a legislature borrows
common law terms of art in writing legislation, ‘it presumably knows and adopts
6
Respondent also advances the broader contention that whistleblower
awards are payable only for recoveries under “the internal revenue laws.” See sec.
7623(a)(2). Because FBAR penalties are paid under Title 31, respondent argues
that they are not “collected proceeds” under section 7623(b)(1). Since we rule for
respondent under the affirmative defense in section 7623(b)(5)(B), we need not
address this alternative contention. We note that the IRS Chief Counsel opinion
issued during the consideration of petitioner’s case acknowledges one type of
payment made outside of Title 26 that does constitute “collected proceeds.” That
opinion notes that “[t]he IRS assesses and collects in the same manner as tax any
criminal restitution ordered” in a criminal case, and that “any such restitution
should be included as ‘collected proceeds’ for purposes of section 7623, even
though ordered pursuant to Title 18.” See supra p. 4.
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the cluster of ideas that were attached to [the] borrowed word[s].’” (alteration in
original) (quoting 1618 Twenty-First St. Tenants’ Ass’n v. The Phillips
Collection, 829 A.2d 201, 203 (D.C. 2003)). Where the same word or phrase
appears multiple times within a statutory text, it is generally presumed to have the
same meaning each place it appears. See, e.g., Atl. Cleaners & Dyers, Inc. v. Uni-
ted States, 286 U.S. 427, 433 (1932) (“Undoubtedly, there is a natural presumption
that identical words used in different parts of the same act are intended to have the
same meaning.”); Rand v. Commissioner, 141 T.C. 376, 385 (2013) (same).
The term “additional amounts,” when used in a series that also includes the
words “tax” and either “additions to tax” or “additions to the tax,” appears nearly
40 times in the Internal Revenue Code.7 Elsewhere in the U.S. Code, the term
“additional amount” appears in a series of this sort only twice; in both instances,
the provision in which it appears is captioned “Taxes.” See 22 U.S.C. sec.
1631k(d) (2006) (defining “tax[es]” to include specified taxes “and also any
interest, penalty, additional amount, or addition thereto”); 50 U.S.C. sec. 4333
(2006) (same).
7
Such appearances include sections, 692(a)(2), 860, 3121(l)(1)(A), 4961(a),
6155(a), 6159(c)(1), 6201(a), 6202, 6214, 6221, 6226, 6229, 6230, 6242, 6247(c),
6321, 6324A(a), 6404, 6423(d)(2), 6503(f)(2)(B), 6601(e)(2), 6602, 6665, 6751,
6851(a)(1), 6852(a)(1)(B), 6861(a), 6862, 6871, 6902(b), 7122, 7463(e), 7485,
7491, 7508, 7508A, and 7522(a).
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“Additional amounts” and “additions to the tax” are terms of art in the Inter-
nal Revenue Code. Chapter 68 of the Code is captioned “Additions to the Tax,
Additional Amounts, and Assessable Penalties.” Subchapter A of chapter 68 is
captioned “Additions to the Tax and Additional Amounts.” This subchapter
includes 13 sections, including the additions to tax for failure timely to file a
return or timely pay tax, the accuracy-related penalty under section 6662, and the
fraud penalty under section 6663. Section 6665, the last section in this subchapter,
is captioned “Applicable Rules.” It states that, except as otherwise provided in
Title 26, “the additions to the tax, additional amounts, and penalties provided by
this chapter shall be * * * assessed, collected, and paid in the same manner as
taxes” and that “any reference in this title to ‘tax’ imposed by this title shall be
deemed also to refer to the additions to the tax, additional amounts, and penalties
provided by this chapter.”
Given this statutory structure, we have repeatedly held that the term “addi-
tional amounts” has a technical meaning in the Code, referring specifically to pen-
alties set forth in chapter 68, subchapter A. For example, in Bregin v. Commis-
sioner, 74 T.C. 1097, 1101 (1980), we had to determine whether we had juris-
diction in a deficiency case to consider an IRS claim for an erroneous refund.
Under section 6214(a), this Court has jurisdiction “to redetermine the correct
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amount of the deficiency even if the amount so redetermined is greater than the
amount of the deficiency * * * and to determine whether any additional amount, or
any addition to the tax should be assessed, if claim therefor is asserted by the
Secretary at or before the hearing.” The IRS urged that the term “additional
amount” be construed broadly enough to include the erroneous refund it sought to
recover from the taxpayer.
We disagreed. We noted that “[t]he term ‘additional amount’ appears in
chapter 68 of the Internal Revenue Code of 1954, which relates to ‘Additions to
the Tax, Additional Amounts, and Assessable Penalties.’” 74 T.C. at 1102-1103.
We concluded that the term “additional amounts” as used in chapter 68 means one
of the civil penalties referred to in that chapter and “that the same meaning was
intended in section 6214(a), especially since it refers to both additional amounts
and additions to the tax.” Id. at 1103. Our review of the legislative history
confirmed that the term “additional amounts” as used in section 6214(a) was
“intended only to refer to claims for the civil penalties.” Ibid.
In Pen Coal Corp. v. Commissioner, 107 T.C. 249 (1996), we had to decide
whether we had jurisdiction to redetermine a corporate taxpayer’s liability for
interest computed at the increased rate prescribed by section 6621(c). The
taxpayer contended that section 6214(a) gave the Court jurisdiction on the theory
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that “such interest constitutes an ‘additional amount’ within the meaning of
section 6214(a).” Id. at 255-256. Relying on our analysis in Bregin we rejected
this argument, concluding: “Congress used the phrase ‘any additional amount, or
any addition to the tax’ in section 6214(a) to ensure an understanding that this
Court’s jurisdiction encompasses items that are to be assessed, collected, and paid
in the same manner as taxes, including the additions to tax and other additional
amounts * * * described in chapter 68.” Id. at 258; cf. El v. Commissioner, 144
T.C. 140, 148 (2015) (holding that the “additional tax” imposed by section
72(t)(1) is not a “penalty, addition to tax, or additional amount” within the
meaning of section 7491(c)).
In Williams v. Commissioner, 131 T.C. 54 (2008), we ruled that FBAR pen-
alties do not constitute “additional amounts” for purposes of our deficiency or
CDP jurisdiction. The taxpayer there sought redetermination of tax deficiencies
for certain years and also asked us to “abate” FBAR penalties allegedly imposed
for his failure to disclose Swiss bank accounts. Id. at 55. We held that we lacked
jurisdiction over the FBAR penalties, noting that they “are authorized in Title 31
(‘Money and Finance’) of the United States Code, not Title 26 (the Internal Reve-
nue Code).” Id. at 56. The taxpayer “d[id] not point to any grant of jurisdiction to
this Court that would extend to FBAR penalties,” and we found none. Id. at 57.
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We noted that the term “tax” is defined for purposes of our CDP jurisdiction “to
include ‘additions to the tax, additional amounts, and penalties provided by’”
chapter 68. Id. at 59 n.6 (quoting section 6665(a)(2)). But “we * * * [were] aware
of no statute that would expand ‘tax’ as used in the lien and levy statutes in Title
26 to include the FBAR penalty of Title 31.” Ibid.
As these cases show, we have consistently held that “additional amounts,”
particularly when it appears in a series that also includes “tax” and “additions to
tax,” is a term of art that refers exclusively to the civil penalties enumerated in
chapter 68, subchapter A. “Additional amounts” appears in section 7623(b)(5)(B)
in conjunction with “tax” and “additions to tax,” and we find no reason to give
that term a different meaning in this section than it has elsewhere. In Williams, we
ruled that an FBAR civil penalty is not an “additional amount” for purposes of our
deficiency or CDP jurisdiction. Petitioner has supplied no textual basis, either in
the language of the statute or the structure of the Code, for reaching a different
conclusion with respect to the whistleblower provision at issue here.
FBAR civil penalties are not among the tax-related penalties enumerated in
chapter 68, and they are not “assessed, collected, and paid in the same manner as
taxes.” Sec. 6665(a)(1); see Moore, 2015 WL 1510007, at *8 (“In contrast to
well-worn procedures for assessing tax deficiencies, a person searching the Code
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of Federal Regulations or United States Code for information on the procedure for
FBAR penalty assessment will come up nearly empty-handed.”). FBAR penalties
are not “additional amounts” within the meaning of section 7623(b)(5)(B), and
they must be excluded in determining whether the $2,000,000 “amount in dispute”
requirement has been satisfied.8
B. Petitioner’s Contentions
1. “Structural” Arguments
Petitioner and amicus curiae NWC argue that the term “additional amounts”
as used in section 7623(b)(5)(B) means, in essence, “other sums of money.” But
they point to no other Code section in which “additional amounts” has this broad
and virtually limitless meaning. And they offer no convincing rebuttal to the can-
ons of construction dictating that terms of art be given a consistent meaning in a
8
Section 7623(b)(1) provides for nondiscretionary awards if the Secretary
proceeds with an “action described in subsection (a),” and subsection (a) author-
izes payment only “where such expenses are not otherwise provided for by law.”
Noting that 31 U.S.C. sec. 5323(a) authorizes the Secretary to pay rewards to
persons who provide information leading to recovery of FBAR penalties, respon-
dent urges that FBAR informant awards are “otherwise provided for by law.”
Petitioner disagrees, noting that rewards under 31 U.S.C. sec. 5323(a) are discre-
tionary whereas rewards under section 7623(b)(1) would be mandatory. Because
we rule for respondent under section 7623(b)(5), we need not address this alter-
native theory. Respondent also contends that FBAR recoveries, because deposited
into the Department of the Treasury’s General Fund, are not “available for”
whistleblower awards. See sec. 7623(a). We need not address this argument
either.
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statutory text and that a technical word or phrase is presumed to have the same
meaning each place it appears. Rather than focus on the subparagraph at issue, pe-
titioner and NWC emphasize language appearing elsewhere in the statute, urging
that these broader meanings be imported into section 7623(b)(5)(B). But they pro-
vide no textual support for doing this, only vague appeals to the statute’s “overall
structure.”
Petitioner and NWC note that section 7623(a) authorizes the Secretary to
pay such sums as he deems necessary, from the “proceeds of amounts collected,”
to detect persons guilty of violating the tax laws “or conniving at the same.”
FBAR civil penalties, they urge, are reasonably embraced within “proceeds of
amounts collected” from persons “conniving at” such violations. Indeed, the
record in this case indicates that the Office, prior to 2009, did pay discretionary
awards under section 7623(a) based on FBAR recoveries, and nothing in this
Opinion would prevent the Secretary from doing so in the future. The question at
hand is whether petitioner is eligible for a nondiscretionary award under section
7623(b), and that depends on whether “the tax, penalties, interest, additions to tax,
and additional amounts in dispute exceed $2,000,000.” The broader language of
section 7623(a) provides no justification for giving the term “additional amounts”
in section 7623(b)(5)(B) a meaning that it has nowhere else in the Code.
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Petitioner next observes that section 7623(b)(1) computes nondiscretionary
awards as a percentage of “the collected proceeds (including penalties, interest,
additions to tax, and additional amounts) resulting from the action.” Congress’
use of the word “including” shows that the ensuing list (which notably omits the
word “tax”) is not exhaustive. See sec. 7701(c); Dunaway v. Commissioner, 124
T.C. 80, 91-92 (2005). And the Supreme Court observed long ago that the word
“proceeds” is “of great generality.” Phelps v. Harris, 101 U.S. (11 Otto) 370, 380
(1879). Petitioner urges that the term “collected proceeds” is broad enough to in-
clude FBAR penalties collected by the IRS, even though they are paid under Title
31 and even if they do not constitute tax, penalties, interest, additions to tax, or
additional amounts under Title 26.
While this argument is not without force, we do not see how it affects the
proper textual analysis of section 7623(b)(5)(B). Congress could have employed,
but did not employ, the term “collected proceeds” when drafting the $2,000,000
monetary threshold. And it did not use the word “including.” Instead, Congress
explicitly and unambiguously provided that a whistleblower is eligible for a non-
discretionary award only “if the tax, penalties, interest, additions to tax, and addi-
tional amounts in dispute” exceed $2,000,000.
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“[W]hen the legislature uses certain language in one part of the statute and
different language in another, the court assumes different meanings were intend-
ed.” Sosa v. Alvarez-Machain, 542 U.S. 692, 711 n.9 (2004) (quoting 2A N.
Singer, Statutes and Statutory Construction, sec. 46:06, at 194 (6th rev. ed. 2000)).
We have no occasion in this case to decide whether “collected proceeds” as used
in section 7623(b)(1) is broad enough to include civil penalties paid for violation
of Title 31. See supra note 6. Even if that question were answered in the
affirmative, petitioner could not qualify for a nondiscretionary award computed on
that broader base unless he first satisfied the section 7623(b)(5)(B) monetary
threshold. He cannot do this because FBAR civil penalties do not constitute
“additional amounts” within the meaning of that section.
As petitioner notes, courts may rely on a statute’s structure as an aid to
interpreting its specific terms. See generally Abramski v. United States, 573 U.S.
__, __, 134 S. Ct. 2259, 2267 (2014). But reliance on context and structure in
statutory interpretation is a “subtle business, calling for great wariness lest what
professes to be mere rendering becomes creation and attempted interpretation of
legislation becomes legislation itself.” Palmer v. Massachusetts, 308 U.S. 79, 83
(1939); Yari v. Commissioner, 143 T.C. 157, 165 n.5 (2014) (“[T]he process of
divining the legislative intent underlying a statute’s * * * structure, while subject
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to canons of construction and well-established methodologies, is hardly an exact
science.”). In the absence of specific statutory language linking the potentially
broader terms of subsections (a) and (b)(1) to the affirmative defense of subsection
(b)(5)(B), we are not at liberty to give “additional amounts”--a term of art with a
long-established meaning--a meaning that it has nowhere else in the Internal
Revenue Code.9
2. Policy Arguments
Because FBAR civil penalties are “administered by the IRS, are reported
alongside income tax returns, and have a tax-related purpose,” petitioner contends
that “they are, in effect, ‘internal revenue laws,’ and should be treated as such
when construing Section 7623’s scope.” Given the IRS’ important role in FBAR
administration, at least one court has found that the Internal Revenue Code and the
FBAR provisions of Title 31 are “related statutes.” Hom v. United States, 2013
WL 5442960 (N.D. Cal. Sept. 30, 2013). According to petitioner, IRS closing
agreements settling offshore voluntary disclosure cases have provided that, “in
9
Congress did create links between other parts of section 7623. For exam-
ple, Congress explicitly linked subsection (b)(1) to subsection (a), mandating an
award “[i]f the Secretary proceeds with any administrative or judicial action
described in subsection (a).” Congress clearly knows how to create such links
when it intends to do so. For whatever reason, it did not create links of the sort
petitioner desires between subsection (b)(5) and the rest of the statute.
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lieu of” an FBAR penalty, the IRS “may assess under Title 26 of the United States
Code a miscellaneous penalty” in an agreed-upon amount. Given the close
connections between the FBAR regime and tax enforcement, petitioner and NWC
urge that treating FBAR penalties the same as taxes is a sensible policy.
The failure to treat FBAR penalties as taxes, petitioner continues, could
undercut the effectiveness of the whistleblower law. At a time when undisclosed
offshore accounts constitute a major form of tax evasion, FBAR penalties, which
can range as high as 50% of the offshore account balance annually, may often
dwarf the income tax liabilities generated by the earnings from that account. If
FBAR penalties do not count toward the $2,000,000 monetary threshold, whistle-
blowers will allegedly have little incentive to blow the whistle on these schemes,
frustrating Congress’ intent in enacting this law.
Petitioner notes that the IRS and the Department of Justice have great dis-
cretion in negotiating settlements and plea agreements. If a case involving undis-
closed offshore accounts also involves large potential income tax liabilities, the
Government may elect to compromise the latter, effectively directing most of the
proceeds into the FBAR penalty bucket. If FBAR proceeds do not count toward
the $2,000,000 monetary threshold, petitioner fears that the Government could
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unilaterally make deserving whistleblowers ineligible for section 7623(b) awards
by the manner in which it settles cases.10
To the extent these concerns have force, they are directed to the wrong
forum. There are indisputably strong practical connections between the FBAR
regime and tax enforcement; that is presumably what persuaded the Secretary to
redelegate FBAR administrative authority to the IRS. But our task is to decide
whether FBAR penalties constitute “tax, penalties, interest, additions to tax, * * *
[or] additional amounts” within the meaning of section 7623(b)(5)(B).
Departmental delegation orders and the practical issues petitioner raises shed no
meaningful light on the proper interpretation of this text. The IRS has broad
discretion in deciding whether to pursue a taxpayer identified by a whistleblower
and in determining how such cases shall be resolved. We lack jurisdiction to
address these matters. Cohen v. Commissioner, 139 T.C. 299, 302 (2012), aff’d,
550 F. App’x 10 (D.C. Cir. 2014); see Lichtman v. United States, 316 F. App’x
10
As noted earlier, petitioner contends that the IRS often settles offshore
voluntary disclosure cases by requiring the taxpayer, in lieu of paying an FBAR
penalty, to pay “under Title 26 of the United States Code a miscellaneous penalty”
in an agreed-upon amount. See supra p. 24; see also Offshore Voluntary
Disclosure Program Frequently Asked Questions and Answers 2014, Q&A 7. If
the penalties thus paid constitute “penalties” within the meaning of section
7623(b)(5)(B)--a point the parties have not addressed because Taxpayer 1 did not
settle his case under those procedures--this manner of settling cases, far from
hurting whistleblowers, would seem to help them.
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116, 119 (3d Cir. 2008) (“[T]he IRS’s decision to investigate or not investigate a
particular taxpayer’s case is within its discretion.”).
Petitioner and NWC may well be right that the statute would offer stronger
incentives to whistleblowers if FBAR civil penalties were treated like tax
liabilities for purposes of determining eligibility for nondiscretionary awards
under section 7623(b)(5)(B). And in that event the whistleblower law might more
effectively advance the objectives that Congress envisioned for it. But if this is a
gap in the statute, it is a gap that only Congress, and not this Court, can fill.
To reflect the foregoing,
An appropriate order and decision
will be entered for respondent.