Filed January 10, 2025

No. 21-1268

MICHAEL LISSACK, APPELLANT

v.

COMMISSIONER OF INTERNAL REVENUE, APPELLEE

On Remand from the Supreme Court of the United States

Erica L. Brady-Gitlin argued the cause for appellant. With her on the briefs were Gregory S. Lynam and Scott A. Knott.

Brian C. Wille and Usman Mohammad were on the brief for amicus curiae Whistleblower 1109-13W in support of appellant.

Dean Zerbe and Stephen M. Kohn were on the brief for amicus curiae National Whistleblower Center in support of appellant.

Julie Ciamporcero Avetta, Attorney, U.S. Department of Justice, argued the cause for appellee. With her on the brief was Bruce R. Ellisen, Attorney. 2 Before: PILLARD and KATSAS, Circuit Judges, and RANDOLPH, Senior Circuit Judge.

Opinion for the Court filed by Circuit Judge PILLARD.

PILLARD, Circuit Judge: Section 7623 of the Internal Revenue Code authorizes the IRS to pay awards to whistleblowers who identify underpayment of taxes or violations of internal revenue law. The provision at issue here, subsection 7623(b)(1), mandates awards for whistleblowers who provide the IRS with information that makes a substantial contribution to a tax adjustment. It calls for awards of between 15 and 30 percent of proceeds the IRS collects “as a result of” an “administrative or judicial action” that is “based on information” provided by a whistleblower. I.R.C. § 7623(b)(1). The IRS’s “determination of the amount of such award” depends on the extent to which a whistleblower “substantially contributed” to the administrative action. Id. A Treasury regulation implementing the statute allows the IRS to treat investigations into unrelated tax issues of the same taxpayers as separate “administrative action[s].” 26 C.F.R. §§ 301.7623-2(a)(2), (b)(2) (Example 2). Appellant Michael Lissack claimed that the IRS owed him a whistleblower award under subsection 7623(b)(1), and he argued that the Treasury regulation on which the IRS relied to decide otherwise contravenes the text of the statute.

Lissack submitted information to the IRS that he thought showed that a condominium development group evaded taxes through its treatment of golf-club-membership deposits. The IRS deemed the information Lissack submitted sufficiently specific and credible to warrant opening an examination, but later concluded that the membership deposits were correctly reported. Through its own further investigation, however, the IRS discovered an unrelated problem: The same development 3 group had taken an impermissible deduction on intercompany bad debt. The IRS eventually ordered the development group to pay a large adjustment relating to its treatment of that debt, but it denied Lissack’s claim for a percentage of those proceeds. When Lissack sought review of that decision, the Tax Court granted summary judgment to the IRS. Lissack v. Comm’r, 157 T.C. 63, 78 (2021). Lissack appealed to us, and the IRS primarily argued that the Tax Court lacked jurisdiction to review its award denial, even as it defended its rule and its application to Lissack’s case.

In an opinion issued in 2023, we held that the Tax Court had jurisdiction, the Whistleblower Definitions Rule was a reasonable interpretation of the statute under Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984), and the Tax Court correctly decided summary judgment on a sufficient administrative record that Lissack never sought to supplement. Lissack v. Comm’r, 68 F.4th 1312 (D.C. Cir. 2023).

Lissack sought Supreme Court review. Petition for Writ of Certiorari, Lissack v. Comm’r, 144 S. Ct. 2707 (2024) (No. 23-413). In the interim, the Court decided Loper Bright Enterprises v. Raimondo, 144 S. Ct. 2244 (2024)