T.C. Memo. 2018-177
UNITED STATES TAX COURT
AZAEL DYTHIAN PERALES, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 787-18W. Filed October 23, 2018.
Azael Dythian Perales, pro se.
Kimberly A. Daigle and John T. Arthur, for respondent.
MEMORANDUM 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). Respondent contends that he is entitled to judgment as a matter of law
because the IRS Whistleblower Office (Office) did not initiate any administrative
or judicial action against any taxpayer and did not collect any proceeds on the
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[*2] basis of the information petitioner provided. See sec. 7623(b)(1).1 We will
grant respondent’s motion.
Background
The following facts are derived from the parties’ pleadings and respondent’s
motion papers, including a declaration and the exhibits attached thereto. Petition-
er resided in California when he filed his petition.
Petitioner filed a Form 211, Application for Award for Original Informa-
tion, that was received by the Office on August 4, 2017. His Form 211 and the
materials appended to it, apparently cut and pasted from various websites, were
rambling and incoherent. He made no discernible allegations regarding the tax
liability of any person. Rather, he alleged that numerous individuals and entities--
banks, public utilities, California government entities, and agencies of the U.S.
Government--had committed espionage, conspiracy, bank fraud, and other crimes.
He adduced in support of these assertions no factual material of any kind.
The Office assigned 11 separate claim numbers to petitioner’s claims. The
analyst assigned to review the claims determined that his allegations were not
“specific [or] credible,” that “no tax issue [had been] stated or identified,” and that
1
All statutory references are to the Internal Revenue Code in effect at the
relevant times, and all Rule references are to the Tax Court Rules of Practice and
Procedure.
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[*3] “no specific information about a federal tax issue or non-compliance was
provided.” The analyst recommended that each claim be rejected “for lack of
specific information stating that this is an IRS tax issue.”
The analyst’s recommendation to reject petitioner’s claims was approved by
her supervisors at the Office. The Office did not forward petitioner’s information
to any IRS operating division. The IRS commenced no action against, and col-
lected no proceeds from, any taxpayer as a result of the information petitioner sup-
plied. By letter dated January 2, 2018, the Office informed petitioner that his
claims had been denied, stating that “the information provided was speculative
and/or did not provide specific or credible information regarding tax underpay-
ments or violations of internal revenue laws.”
On January 16, 2018, petitioner petitioned this Court for review of the Of-
fice’s determinations. On August 2, 2018, respondent filed a motion for summary
judgment under Rule 121. We ordered petitioner to respond to that motion on or
before September 7, 2018. We advised him that if he “disagree[d] with the facts
set out in the motion, [he] should point out the specific facts in dispute and explain
why these factual disputes are important.” Petitioner did not respond to our order
and has not otherwise responded to the motion for summary judgment.
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[*4] Discussion
A. Summary Judgment Standard
The purpose of summary judgment is to expedite litigation and avoid costly,
time-consuming, and unnecessary trials. Fla. Peach Corp. v. Commissioner, 90
T.C. 678, 681 (1988). The Court may grant summary judgment “upon all or any
part of the legal issues in controversy” when there is no genuine dispute as to any
material fact and a decision may be rendered as a matter of law. Rule 121(a) and
(b); Sundstrand Corp. v. Commissioner, 98 T.C. 518, 520 (1992), aff’d, 17 F.3d
965 (7th Cir. 1994). In deciding whether to grant summary judgment, we construe
factual materials and inferences drawn from them in the light most favorable to the
nonmoving party. Sundstrand Corp., 98 T.C. at 520. However, the nonmoving
party “may not rest upon the mere allegations or denials” of his pleadings but
instead “must set forth specific facts showing that there is a genuine dispute for
trial.” Rule 121(d); see Sundstrand Corp., 98 T.C. at 520.
Because petitioner did not respond to the motion for summary judgment, we
could enter decision against him for that reason alone. See Rule 121(d). We will
nevertheless consider the motion on its merits. We find that no material facts are
in dispute and that this case may appropriately be adjudicated summarily.
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[*5] B. Standard and Scope of Review
We review the Secretary’s determination as to whether a whistleblower is
entitled to an award under section 7623(b)(1) by applying an abuse-of-discretion
standard. Kasper v. Commissioner (Kasper II), 150 T.C. __, __ (slip op. at 23)
(Jan. 9, 2018). Abuse of discretion exists when a determination is arbitrary, ca-
pricious, or without sound basis in fact or law. Murphy v. Commissioner, 125
T.C. 301, 320 (2005), aff’d, 469 F.3d 27 (1st Cir. 2006). In ascertaining whether
the Secretary abused his discretion, we confine our review to the administrative
record. Kasper II, 150 T.C. at __ (slip op. at 20).
C. Analysis
Petitioner is no stranger to the Office or this Court. He has filed numerous
substantially similar claims for award, advancing in each case unsupported alle-
gations of criminal activity by hundreds of individuals, corporations, and govern-
ment entities, including Federal courts. In no case did he allege a Federal tax un-
derpayment or noncompliance by any discernible taxpayer. We have granted
summary judgment to respondent in three cases so far. See Perales v. Com-
missioner, T.C. Memo. 2017-90; Perales v. Commissioner, T.C. Dkt. No. 20332-
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[*6] 17W (Aug. 20, 2018); Perales v. Commissioner, T.C. Dkt. No. 21791-17W
(Aug. 20, 2018). Two more cases wait in the wings.2 Our patience is wearing
thin.
Section 7623(b)(1) provides for nondiscretionary (i.e., mandatory) awards
of at least 15% and not more than 30% of the collected proceeds if all stated re-
quirements are met. Before any award can be paid, section 7623(b)(1) requires
that the IRS first proceed with an “administrative or judicial action” and then
collect proceeds from the target taxpayer. See Cohen v. Commissioner, 139 T.C.
299, 302 (2012), aff’d, 550 F. App’x 10 (D.C. Cir. 2014); Whistleblower 14106-
10W v. Commissioner, 137 T.C. 183, 189 (2011). While we have jurisdiction to
review the IRS’ award determination, section 7623 gives us no authority to direct
the IRS to commence an administrative or judicial action. See Cooper v. Commis-
sioner, 136 T.C. 597, 600-601 (2011). If the IRS proceeds with no administrative
or judicial action, there can be no whistleblower award. Id. at 601.
Respondent attached to his motion for summary judgment a declaration of
Kathy Wolsey, a manager for whistleblower claims evaluations. As shown in her
2
Besides the instant case, petitioner filed two other whistleblower cases that
were set for trial on our October 22, 2018, Washington, D.C., trial session. See
Perales v. Commissioner, T.C. Dkt. No. 25116-17W (filed Dec. 7, 2017); Perales
v. Commissioner, T.C. Dkt. No. 26906-17W (filed Jan. 9, 2018).
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[*7] declaration, the Office properly rejected each of petitioner’s claims “for lack
of specific information stating that this is an IRS tax issue.” The Office did not
forward his information to any IRS operating division, and the IRS commenced no
action against, and collected no proceeds from, any taxpayer as a result of the
information he supplied. Petitioner does not allege any material dispute as to
these facts.
The initiation of an administrative or judicial action and collection of tax
proceeds are necessary prerequisites to a whistleblower award. See id. at 600.
Because petitioner has met none of the threshold requirements for a whistleblower
award, we will grant summary judgment for respondent.
To reflect the foregoing,
An appropriate order and decision
will be entered for respondent.