Thomas Shands v. Cmsnr. IRS (REISSUED PUBLIC OPINION)

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued April 2, 2024 Decided July 16, 2024

Reissued August 7, 2024

No. 23-1160

THOMAS SHANDS,

APPELLANT

v.

COMMISSIONER OF INTERNAL REVENUE,

APPELLEE

On Appeal from the

United States Tax Court

Stacy D. Blank argued the cause for appellant. With her

on the briefs were Alexander Olama and Avery A. Holloman.

Julie Ciamporcero Avetta, Attorney, U.S. Department of

Justice, argued the cause for appellee. With her on the brief

was Bruce R. Ellisen, Attorney.

Before: PILLARD, WALKER and PAN, Circuit Judges.

Opinion for the Court filed by Circuit Judge PAN.

Concurring opinion filed by Circuit Judge PILLARD.

2

PAN, Circuit Judge: The federal government launched a

criminal investigation of a tax-evasion scheme in which Swiss

bankers and a Swiss bank hid the assets of certain U.S.

taxpayers in undisclosed, offshore accounts. Thomas Shands

was a cooperator in the investigation. He received immunity

from prosecution and a whistleblower award of over $8.5

million in exchange for his assistance. But Shands wanted

more. He claimed that he was entitled to an additional award

because the information he provided led to the government’s

collection of over $2.3 billion through an Internal Revenue

Service (“IRS”) program that encouraged voluntary

disclosures of tax violations. The IRS denied Shands’s claim,

and the Tax Court dismissed his petition for review because it

determined that it lacked jurisdiction under Li v.

Commissioner, 22 F.4th 1014 (D.C. Cir. 2022). Because we

agree that Shands failed to carry his burden to establish the Tax

Court’s jurisdiction, we affirm.

I.

A.

The IRS rewards individuals who provide information to

the agency that results in the collection of tax proceeds. Such

“whistleblowers” are entitled to awards of as much as 30

percent of the money collected if the IRS “proceeds” with an

“administrative or judicial action” against a taxpayer based on

the whistleblower’s information. 26 U.S.C. § 7623(b)(1).1 An

1

Specifically, 26 U.S.C. § 7623(b)(1) provides:

If the Secretary proceeds with any administrative or

judicial action described in subsection (a)

[regarding detection of tax violations or

underpayments] based on information brought to

3

award also must be granted if the whistleblower’s information

results in the collection of tax proceeds in a separate but

“related” action against a person who was not identified by the

whistleblower. Id.2

the Secretary’s attention by an individual, such

individual shall . . . receive as an award at least 15

percent but not more than 30 percent of the

proceeds collected as a result of the action

(including any related actions) or from any

settlement in response to such action . . . .

2

The Whistleblower Statute does not define “related actions,”

but the Treasury Department’s regulations provide that a related

action must be connected to the original action in three ways:

(i) The facts relating to the underpayment of tax or

violations of the internal revenue laws by the other

person [subject to the related action] are

substantially the same as the facts described and

documented in the information provided (with

respect to the person(s) subject to the original

action);

(ii) The IRS proceeds with the action against the

other person based on the specific facts described

and documented in the information provided [by

the whistleblower]; and

(iii) The other, unidentified person is related to the

person identified in the information provided [by

the whistleblower]. For purposes of this paragraph,

an unidentified person is related to the person

identified in the information provided if the IRS can

identify the unidentified person using the

information provided (without first having to use

4

Whistleblowers who provide information to the IRS may

request an award by filing a Form 211 with the Whistleblower

Office. See 26 C.F.R. § 301.7623-1(c)(1)–(2). The

Whistleblower Office then determines whether to reject, deny,

or approve the whistleblower claim. The Office rejects a claim

that is invalid for reasons “relate[d] solely to the whistleblower

and the information on the face of the claim that pertains to the

whistleblower.” Id. § 301.7623-3(c)(7). For example, a claim

is properly rejected if the Form 211 does not include required

information (such as the whistleblower’s name or date of

birth); or if the whistleblower is ineligible for an award

(perhaps because he obtained the information through federal

employment). See id. § 301.7623-1(b)(2), (c)(2), (c)(4). Thus,

a rejection typically occurs without any referral to an IRS

operating division for investigation of the claim. By contrast,

the Whistleblower Office will deny a claim due to an issue that

“relates to or implicates [the] taxpayer information” that was

provided by the whistleblower. Id. § 301.7623-3(c)(8). A

denial usually occurs after the Form 211 is referred for

investigation and may be appropriate because, for example,

“the IRS either did not proceed based on the information

provided by the whistleblower . . . or did not collect proceeds.”

Id. Finally, if the Whistleblower Office determines that an

award is justified after examining the Form 211 and the results

of any associated investigation, it will calculate and pay the

award to the whistleblower. See id. § 301.7623-3(c)(1)–(6).

A whistleblower may appeal the IRS’s “determination

regarding [a whistleblower] award” to the Tax Court, which

“shall have jurisdiction with respect to such matter.” 26 U.S.C.

the information provided to identify any other

person or having to independently obtain additional

information).

26 C.F.R. § 301.7623-2(c)(1).

5

§ 7623(b)(4) (“Any determination regarding an award under

[26 U.S.C. § 7623(b)(1), (2), or (3) — the Whistleblower

Statute] may . . . be appealed to the Tax Court (and the Tax

Court shall have jurisdiction with respect to such matter).”).

We interpreted that jurisdictional provision in Li v.

Commissioner, 22 F.4th 1014 (D.C. Cir. 2022). There, we held

that an appealable “determination regarding an award” does

not include a threshold rejection of a whistleblower claim. Id.

at 1017 (expressly abrogating Cooper v. Comm’r, 135 T.C. 70

(2010), and Lacey v. Comm’r, 153 T.C. 146 (2019)). We

explained that “an award determination by the IRS arises only

when the IRS ‘proceeds with any administrative or judicial

action . . . based on information brought to the Secretary’s

attention by [the whistleblower].’” Id. (emphasis and final

alteration in original) (quoting 26 U.S.C. § 7623(b)(1)). Thus,

the Whistleblower Office’s rejection of a claim on its face,

without referring the information to an IRS operating division,

does not constitute an “award determination” because such “[a]

threshold rejection of a Form 211 by nature means the IRS is

not proceeding with an action against the target taxpayer.” Id.

at 1017. And absent an “award determination,” there is no Tax

Court jurisdiction under § 7623(b)(4). Id.

The parties also cite Lissack v. Commissioner, in which

we explained that, so long as the IRS “proceed[ed] with an

administrative action that was based on the information [the

whistleblower] brought to the [IRS’s] attention,” the Tax Court

had jurisdiction over the whistleblower’s appeal of an award

denial. 68 F.4th 1312, 1321 (D.C. Cir. 2023) (cleaned up). In

Lissack, unlike in Li, the Whistleblower Office referred the

whistleblower’s submission to an operating division of the

IRS, which initiated an examination of the issue Lissack

identified. Id. The fact that the IRS did not collect any

proceeds based on the whistleblower’s information was a

6

reason for his claim to fail on the merits — not for lack of

jurisdiction. Id.

The Supreme Court subsequently vacated Lissack on other

grounds. See Lissack v. Comm’r, __ S. Ct. __, 2024 WL

3259664 (July 2, 2024) (Mem.). It did so because Lissack

upheld the regulations defining “administrative action” and

“related action” under the Chevron framework. See 68 F.4th

at 1322–26 (citing Chevron, U.S.A., Inc. v. Nat. Res. Def.

Council, Inc., 467 U.S. 837, 843 (1984)). The Supreme Court

remanded and instructed us to “further consider[]” the case “in

light of Loper Bright Enterprises v. Raimondo, 603 U.S. __

(2024),” which overruled Chevron. Lissack, __ S. Ct. __, 2024

WL 3259664; see Loper Bright Enters., 603 U.S. at __. We do

not rely on our prior opinion in Lissack to resolve this appeal.

As discussed infra, our reasoning turns on the text of the

Whistleblower Statute, which requires that the IRS “proceed”

with an action “against any taxpayer,” as well as Li’s

interpretation of the statutory text. See Li, 22 F.4th at 1017

(quoting 26 U.S.C. § 7623(b)(1)); 26 U.S.C. § 7623(b)(5).

Moreover, the remand proceeding in Lissack does not affect

our resolution of this appeal because Shands does not question

the validity or applicability of the regulations at issue in that

case. See Al-Tamimi v. Adelson, 916 F.3d 1, 6 (D.C. Cir. 2019)

(noting arguments not raised on appeal are forfeited).

B.

Thomas Shands asked a banker at UBS, Martin Lack, to

open an account for him. Lack (purportedly unbeknownst to

Shands) opened a Swiss bank account for Shands at Basler

Kantonalbank (“BKB”). Shands did not disclose the account

or its assets to the IRS, as required. See 31 C.F.R. § 103.24

(2010). When Shands eventually attempted to voluntarily

disclose the account, he learned that he was already a subject

7

of an IRS criminal investigation. In return for criminal

immunity, Shands cooperated in the investigation of certain

bankers for their use of offshore accounts to hide client assets

from the IRS. Shands’s cooperation included, among other

things, recording telephone calls with Lack and meeting with

Lack’s colleague, Renzo Gadola, while using a concealed

recording device. The government prosecuted Lack and

Gadola, and expanded its criminal investigation to encompass

BKB, other Swiss banking professionals, and a few U.S.

accountholders.

In October 2010, early in his cooperation with the IRS,

Shands submitted a Form 211 to claim a whistleblower award.

He stated in the form that the relevant information “will

become available as a result of my cooperation with the

Department of Justice and IRS Criminal Investigation Division

in ongoing investigations, including but not limited to

cooperation against Martin Lack and Renzo [Gadola],” and

that “[i]t is anticipated that such cooperation will result in the

identification of U.S. persons who have maintained undeclared

offshore financial accounts.” J.A. 272. Based on that single

Form 211, the IRS created separate claim numbers related to

Lack, Gadola, BKB, a handful of other Swiss bankers, and a

few of their individual U.S. clients. Shands collected more

than $8.5 million in whistleblower awards based on nine

claims.

As the Swiss banking investigation developed, the IRS

launched the IRS Offshore Voluntary Disclosure Initiative in

February 2011 (“OVDI”). The 2011 OVDI, building off a

similar 2009 program, incentivized taxpayers to voluntarily

disclose offshore accounts and pay past-due taxes, interest, and

penalties arising from the previous non-disclosure of those

accounts. See I.R.S. News Release IR-2011-14 (Feb. 8, 2011).

In a typical OVDI case, a taxpayer could disclose offshore

8

accounts for tax years 2003 to 2010; file corrected tax returns;

and pay all taxes, interest, and penalties calculated under the

OVDI’s uniform penalty structure. Such voluntary disclosures

usually would not lead the IRS to conduct an “examination,”

that is, a formal audit, see IRS, The Examination (Audit)

Process, FS-2006-10 (Jan. 2006), available at

https://perma.cc/6PBM-873W. Instead, an examiner would

review a voluntary disclosure only to certify its accuracy and

completeness, and the IRS and taxpayer then would sign a

“Closing Agreement” to resolve the tax liability for the

relevant years. Nevertheless, the IRS reserved the right to

conduct an examination following a voluntary disclosure, and

a taxpayer’s participation in the OVDI did not provide criminal

immunity even though it greatly reduced the risk of

prosecution. By 2015, the IRS had collected over $2.3 billion

in taxes, interest, and penalties through the OVDI.

In June 2012, Shands sent a letter to the IRS requesting an

additional claim number so that he could apply for a

whistleblower award based on the money collected by the IRS

through the 2011 OVDI. Shands’s OVDI claim relied on his

role in the successful prosecutions of Gadola and Lack.

According to Shands, he was entitled to a whistleblower award

because the OVDI is an “administrative or judicial action” or a

“related action[]” that was “based on” the information he

provided about Gadola and Lack. See 26 U.S.C. § 7623(b)(1).

He noted that prosecutors stated at Gadola’s sentencing that

“Gadola’s guilty plea as well as the very public nature of his

cooperation in the prosecution of Martin Lack and Christos

Bagios has been of great benefit to the IRS as it has spurred

U.S. taxpayers to enter into the [OVDI] program.” J.A. 302.

Shands also claims credit for BKB’s cooperation with the

government and entry into a deferred prosecution agreement in

2018. As noted in that agreement, BKB’s cooperation included

9

disclosing information regarding illegal offshore accounts and

“[c]onducting extensive outreach to former U.S. customers in

order to encourage their participation in IRS-sponsored

voluntary disclosure programs.” J.A. 387, 389.

Thus, Shands asserted that the success of the OVDI was

attributable to the prosecutions of Gadola and Lack (and, later,

BKB), and those prosecutions depended on the information

that he had provided. Although Shands’s position on the

amount of the requested award has not been consistent, he at

times has sought between 15 and 30 percent of the entire $2.3

billion that the IRS collected through the OVDI. See J.A. 244

(letter from Shands attorney to IRS stating “Shands is entitled

to an award on the roughly two billion dollars collected as a

result of the 2011 [OVDI]”); id. at 320 (Whistleblower Office

analyst stating that Shands is “seeking an award on the billions

of dollars recovered from [the OVDI]”).

An analyst in the Whistleblower Office reviewed Shands’s

OVDI claim. The analyst recommended denying the claim

without referring it to another division for investigation.

According to the analyst, “[t]he strongest reason to deny this

OVDI claim . . . is because unidentified taxpayers who entered

the February 2011 OVDI program clearly do not meet the

definition of ‘related action.’” J.A. 321. Furthermore, “the

information provided [about Lack, Gadola, and BKB]

established no valid link or relationship to the OVDI program.”

Id. at 322. The analyst explained that the “unusual nature” of

Shands’s case justified a denial of the OVDI claim without

referring the matter to an IRS operating division. Id. at 320.

Based on that recommendation, the IRS made a preliminary

decision to deny Shands’s OVDI claim. The agency then gave

Shands an opportunity to submit comments before sending him

a final denial letter. The final letter “den[ied]” his claim and

explained that “the IRS took no action based on the

10

information that you provided with respect to [the OVDI],” and

that “this OVDI program and these taxpayers are not valid

related actions to your Whistleblower claim.” Id. at 48.

Shands filed a petition for review in the Tax Court to

challenge the denial of his OVDI claim. While cross-motions

for summary judgment were pending in the Tax Court, we

issued our opinion in Li v. Commissioner. The government

moved to dismiss the petition for lack of jurisdiction under Li,

and the Tax Court granted the motion. The Tax Court reasoned

that because each OVDI case is triggered by a taxpayer’s

voluntary disclosure, no individual OVDI case is a “civil or

criminal proceeding against any person.” Shands v. Comm’r,

160 T.C. No. 5, No. 13499-16W, 2023 WL 2399912, at *4

(Mar. 8, 2023). Thus, an OVDI case does not fall under the

applicable regulatory definition of “administrative action” or

“judicial action,” and cannot provide a basis for jurisdiction

under Li. Id. The Tax Court also concluded that OVDI cases

cannot be “related actions” because any related action must be

an “administrative action” or “judicial action” under the

regulatory definitions of those terms. See id. Shands timely

appealed.

II.

We generally review Tax Court decisions “in the same

manner and to the same extent as decisions of the district courts

in civil actions tried without a jury.” 26 U.S.C. § 7482(a)(1).

Our jurisdiction over the merits of Shands’s claim, if any,

comes from 26 U.S.C. § 7482(a)(1) and “is predicated upon the

Tax Court having jurisdiction.” Li, 22 F.4th at 1015. We

consider the jurisdictional question de novo. Myers v. Comm’r,

928 F.3d 1025, 1031 (D.C. Cir. 2019). Shands has the burden

to establish jurisdiction because he is the party asserting it. See

11

Cause of Action Inst. v. Off. of Mgmt. & Budget, 10 F.4th 849,

854 (D.C. Cir. 2021); Le v. Comm’r, 114 T.C. 268, 270 (2000).

III.

A.

Under Li, Tax Court jurisdiction “arises only when the IRS

‘proceeds with any administrative or judicial action . . . based

on information brought to the Secretary’s attention by [the

whistleblower].’” Li, 22 F.4th at 1017 (emphasis and final

alteration in original) (quoting 26 U.S.C. § 7623(b)(1)). And

the relevant portion of the Whistleblower Statute — including

the jurisdictional provision at issue here — applies only to

actions “against any taxpayer.” 26 U.S.C. § 7623(b)(5)

(emphasis added). Applying that standard, we must decide in

this case whether the OVDI cases that allegedly flowed from

Shands’s cooperation entailed the IRS “proceed[ing]” with

some “administrative or judicial action” that was “against any

taxpayer.” Id.; Li, 22 F.4th at 1017. Shands argues that “OVDI

proceedings are administrative actions, and the IRS did take

action with respect to the U.S. Clients [of Lack, Gadola, and

BKB] who participated in the 2011 OVDI program.” Shands

Br. 26. We disagree.

OVDI cases do not generally give rise to Tax Court

jurisdiction because they typically are not “against” any

taxpayer. Rather, a taxpayer who participates in the OVDI

chooses to disclose overseas accounts; calculates the taxes,

interest, and penalties associated with the voluntary disclosure;

and then pays the amount that is owed. That process is initiated

and directed by the taxpayer. It therefore cannot be fairly

characterized as the IRS proceeding with an action against the

taxpayer. See Li, 22 F.4th at 1017. Indeed, the defining

features of the OVDI program are the taxpayer’s voluntary

disclosures and payments: The OVDI thus bears no

12

resemblance to the IRS-driven actions that are listed as

examples of “administrative actions” in the applicable

regulation, see 26 C.F.R. § 301.7623-2(a)(2) (citing as

examples “an examination, a collection proceeding, a status

determination proceeding, or a criminal investigation”).

Shands contends that OVDI cases confer jurisdiction

because they are “administrative proceedings established and

supervised by the IRS for the specific purpose of collecting

proceeds.” Shands Br. 37. But that description, even if

accurate, falls outside the bounds of an “administrative action”

under the law because “proceedings established and supervised

by the IRS” do not necessarily involve an action against any

person. In fact, the normal procedure for paying income taxes

is an administrative process “established and supervised by the

IRS for the specific purpose of collecting proceeds,” id., but

that routine process is not generally viewed as the IRS taking

an “action” that is “against” the millions of Americans who file

their tax returns every year. See Am. Forest & Paper Ass’n v.

FERC, 550 F.3d 1179, 1182 (D.C. Cir. 2008) (“[T]he words of

statutes . . . should be interpreted where possible in their

ordinary, everyday senses.” (second alteration in original)

(quoting Malat v. Riddell, 383 U.S. 569, 571 (1966)).

We acknowledge that OVDI cases or other voluntary-

disclosure programs could lead to administrative or judicial

actions that might justify a whistleblower award under

circumstances not at issue here. For example, a voluntary

disclosure through the OVDI could result in an examination

(that is, an audit) of the taxpayer by the IRS, which would be

an administrative action by the agency against that taxpayer.

See 26 C.F.R. § 301.7623-2(a)(2). Shands, however, argues

only that OVDI cases themselves — i.e., the taxpayer’s

voluntary disclosure of assets and payment of taxes, interest,

13

and penalties — are “administrative actions.” That claim falls

short.

Because Shands does not demonstrate that the IRS

“proceed[ed]” with any “administrative or judicial action” that

was “against” any taxpayer who participated in the OVDI —

regardless of whether any such taxpayer was spurred to action

by his cooperation in the Swiss banking scheme — he fails to

carry his burden to establish jurisdiction. See Li, 22 F.4th at

1017.

B.

We find Shands’s contrary arguments unpersuasive. He

first contends that Li governs only rejections, not denials. In

Shands’s view, the fact that the IRS stated in its final letter to

him that it denied rather than rejected his claim distinguishes

this case from Li and establishes Tax Court jurisdiction. See

Li, 22 F.4th at 1017. But Li’s jurisdictional rule does not turn

on whether the IRS labeled its decision a “rejection” or a

“denial.” Jurisdiction is a creation of statute, see Owens v.

Republic of Sudan, 531 F.3d 884, 887 (D.C. Cir. 2008), and the

statutory grant of jurisdiction over “determination[s] regarding

[a whistleblower] award” does not mention “rejections” or

contrast them with “denials.” See 26 U.S.C. § 7623(b)(4).

Instead, our jurisdictional inquiry focuses on what the IRS did

— i.e., whether it “proceed[ed] with any administrative or

judicial action,” Li, 22 F.4th at 1017 (emphasis in original)

(quoting 26 U.S.C. § 7623(b)(1)) — and not on the words used

by the agency in a letter to the whistleblower. Here, for the

reasons already explained, Shands has not demonstrated that

the IRS “proceed[ed]” with any action against OVDI

participants.

Shands next reasons that the Tax Court had jurisdiction

because a taxpayer’s voluntary disclosure under the OVDI

14

sometimes can lead to the IRS “proceed[ing]” with an

“administrative action.” He cites a GAO report and prior Tax

Court cases that have suggested that the IRS has or can provide

whistleblower awards despite voluntary disclosure by the

subject-taxpayer, as well as the IRS’s apparent agreement that

such a scenario is possible. But as we have already explained,

the mere possibility that an OVDI case could evolve into an

“administrative action” taken by the IRS against a taxpayer

does not provide a basis for jurisdiction where no such

evolution has been identified. Shands does not, for example,

point to any taxpayer who participated in the OVDI as a result

of Shands’s cooperation and then faced an audit that was

triggered by the OVDI disclosure.

Shands blames the IRS for his failure to cite any specific

OVDI-related administrative action that arose from his

cooperation. He highlights the Tax Court’s denial of his

motion to compel the IRS to turn over information identifying

all taxpayers who participated in the OVDI program — a ruling

that assertedly prevented him from identifying actions taken by

the IRS against OVDI participants. Shands claims that

disclosure of the information he sought might have revealed

“the extent to which the IRS relied on information provided by

Shands in . . . OVDI proceedings [and] whether the IRS

conducted a full examination of any U.S. Client who applied

for OVDI.” Reply Br. 14. But Shands made no mention of the

discovery motion in his opening brief, and “[a]rguments raised

for the first time in a reply brief are forfeited.” Fore River

Residents Against the Compressor Station v. FERC, 77 F.4th

882, 889 (D.C. Cir. 2023). In any event, Shands’s motion to

compel sought the disclosure of extensive records pertaining to

all OVDI participants, without tailoring his request to the

information relevant to the jurisdictional inquiry — i.e.,

whether the IRS took action against any of the participants in

response to their voluntary disclosures. The Tax Court thus did

15

not abuse its discretion in denying such a motion. See In re

Sealed Case (Med. Recs.), 381 F.3d 1205, 1211 (D.C. Cir.

2004) (“We review a district court’s discovery rulings for

abuse of discretion.”); 26 U.S.C. § 7482(a)(1) (instructing

courts to “review the decisions of the Tax Court . . . in the same

manner and to the same extent as decisions of the district courts

in civil actions tried without a jury”).

Finally, we take no position on an alternative theory of

jurisdiction that Shands declined to raise. See United States ex

rel. Totten v. Bombardier Corp., 380 F.3d 488, 497 (D.C. Cir.

2004) (noting that we generally do not reach arguments that

parties fail to make on appeal); Bronner on Behalf of Am. Stud.

Ass’n v. Duggan, 962 F.3d 596, 611 (D.C. Cir. 2020)

(explaining that arguments in favor of jurisdiction can be

waived). Shands has expressly disavowed the potentially

meritorious argument that the IRS “proceeded” with the

original actions (against Lack, Gadola, and BKB), and that

those actions are sufficient to establish jurisdiction over an

asserted related-action claim (involving the OVDI program).

When asked at oral argument if treating the OVDI claim as an

asserted related action provided an alternative theory of

jurisdiction, counsel for Shands responded: “I would not say

that it’s an alternative theory. I think that the related action

addresses the concern that the government raised that the

participants in the OVDI proceedings were not specifically

identified.” Oral Arg. at 2:45–3:10. And when the court later

suggested that the original actions, distinct from the

purportedly related action, could be relevant to jurisdiction,

counsel stated: “It would seem to be a very strange state of

affairs where the taxpayer could rely on the overarching action

to get into court, but then say no action was taken with respect

to me for purposes of the merits.” Id. at 29:00–29:20; see also

id. at 31:09–31:22 (“I’m not sure that the jurisdictional section

or Li would support . . . splitting actions into one for

16

jurisdiction and one for merits.”). Shands thus has waived any

reliance on the original actions against Lack, Gadola, and BKB

as a basis for jurisdiction over the OVDI claim.

Shands devotes a significant portion of his briefing to

explaining why certain OVDI cases were “related actions to

the original actions against the Swiss bankers and BKB.”

Shands Br. 39. As explained, Shands does not offer this

analysis as an alternative theory of jurisdiction, but instead as

a merits argument regarding his entitlement to an award. We

do not reach his merits arguments because he has failed to

establish the Tax Court’s jurisdiction over his OVDI claim.

* * *

For the foregoing reasons, Shands has not carried his

burden to establish the Tax Court’s jurisdiction over his OVDI

claim under 26 U.S.C. § 7623(b)(4). We therefore affirm the

Tax Court’s dismissal of his petition for review.

So ordered.

PILLARD, Circuit Judge, concurring: I agree with the

majority’s treatment of the sole argument in favor of

jurisdiction that Thomas Shands pressed on appeal, which fails

under our decision in Li v. Commissioner, 22 F.4th 1014, 1017

(D.C. Cir. 2022). The Tax Court has jurisdiction to hear

appeals of “[a]ny determination regarding an award” under the

whistleblower statute. 26 U.S.C. § 7623(b)(4). We held in Li

that the Internal Revenue Service only makes such an

appealable determination if it “‘proceeds with any

administrative or judicial action’ . . . against the target

taxpayer” identified by the whistleblower. Li, 22 F.4th at 1017

(emphasis in original) (quoting 26 U.S.C. § 7623(b)(1)).

Shands argued that his cooperation in the investigation

against the Swiss bankers Renzo Gadola and Martin Lack led

to their well-publicized guilty pleas, which spurred U.S. clients

of those bankers and their conspirators to come forward and

disclose their tax violations to the Service through the 2011

Offshore Voluntary Disclosure Initiative (OVDI). Shands

sought a whistleblower award on the proceeds collected from

those clients’ voluntary disclosures. He argued that the Service

took action against those OVDI participants, so the Tax Court

had jurisdiction over his claim. But he failed to demonstrate

that the Service’s process of collecting from those self-reported

nonpayers rose to the level of “administrative or judicial

action[s],” such as audits or prosecutions. 26 U.S.C.

§ 7623(b)(1). He therefore did not satisfy the jurisdictional

requirement set out in Li—that he show the Service proceeded

with administrative or judicial action against the target

taxpayers. 22 F.4th at 1017.

I write separately to provide further context for our

holding. The rule set out by Li is not a demanding one. It

simply requires the appellant to establish that the IRS took

some enforcement action. That rule reflects the Tax Court’s

lack of jurisdiction over appeals from a decision by the Service

not to pursue a putative whistleblower’s tip.

2

A closer look at Li itself reveals its limits. Li filed an

application for a whistleblower award, alleging that a target

taxpayer underpaid taxes by, among other things, falsely

claiming dependent children and alimony payments. See Order

and Decision, Li v. Comm’r, No. 5070-19W (T.C. Apr. 6,

2020). The Whistleblower Office reviewed the allegations and

the target taxpayer’s returns but declined to forward Li’s

information to a Service examiner for any potential action, so

no action was taken; the Office simply rejected Li’s award

application. Li, 22 F.4th at 1015. Li’s petition for Tax Court

review was not an “appeal of [an] award determination,” 26

U.S.C. § 7623(b)(4), but an attempt to appeal the Service’s

non-enforcement decision: She argued that the Service did not

adequately consider the evidence she submitted and should

have proceeded with action against the target taxpayer. See

generally Brief for Appellant, Li, 22 F.4th 1014 (No. 20-1245).

The Tax Court lacks jurisdiction over such a non-enforcement

decision, as do we.

Li erected no novel or formidable obstacle to the Tax

Court’s jurisdiction. Congress endowed the Tax Court with

jurisdiction over appeals of “award determination[s],” 26

U.S.C. § 7623(b)(4)—not exercises of non-enforcement

discretion. Our decision in Li that the Tax Court lacked

jurisdiction over that appeal reflects the “general unsuitability

for judicial review of agency decisions to refuse enforcement.”

Heckler v. Chaney, 470 U.S. 821, 831 (1985). In keeping with

the strong presumption against treating statutory preconditions

to relief as jurisdictional, we did not read into the

whistleblower statute any unusual jurisdictional threshold. See

MOAC Mall Holdings v. Transform Holdco LLC, 598 U.S. 288,

297 (2023). We have continued to honor the terms of the

whistleblower statute’s jurisdictional grant, which “ma[k]e[s]

generous provision for judicial review of Whistleblower Office

award decisions.” Lissack v. Comm’r, 68 F.4th 1312, 1320

3

(D.C. Cir. 2023), vacated on other grounds, __ S. Ct. __, 2024

WL 3259664 (mem.) (July 2, 2024).

Our conclusion that the Tax Court lacked jurisdiction over

Mr. Shands’s appeal is not to the contrary but reflects his case-

specific litigation strategy. As the opinion for the court

describes, Shands asserted the Tax Court had jurisdiction

because the OVDI is an “administrative or judicial action,” Op.

8, but that argument lacks merit, id. at 11-13. He also asserted

that the OVDI was a “related action” that was “based on” the

information he provided about the Swiss bankers. The “related

action” inquiry goes not to jurisdiction, however, but to a

claimant’s entitlement to relief.

Recall the whistleblower statute’s directive:

If the Secretary proceeds with any administrative or

judicial action . . . based on information brought to

the Secretary’s attention by an individual, such

individual shall . . . receive as an award at least 15

percent but not more than 30 percent of the proceeds

collected as a result of the action (including any

related actions) . . . .

26 U.S.C. § 7623(b)(1). The statute does not define “related

actions,” but the relevant regulations, unchallenged in this

appeal, explain that a “related action” is “an action against a

person other than the person(s) identified in the information

provided and subject to the original action(s)” that has

specified factual ties to the original action. 26 C.F.R.

§ 301.7623-2(c)(1) (2014). Shands urges that the OVDI

proceedings constitute such “related actions” to the original

actions against the Swiss bankers. Whether he is right on that

point cannot help him clear the jurisdictional hurdle, however,

because whether the OVDI proceedings could ultimately

4

qualify as “related actions” goes not to jurisdiction, but to the

merits.

There is an argument in a case like this one that could

support the Tax Court’s jurisdiction over such a related-action

claim. For starters, the Service clearly proceeded with judicial

actions based on Shands’s information: It referred for

prosecution the individuals against whom Shands cooperated,

including Swiss bankers Gadola and Lack. That is why the

Service has already awarded Shands over $8.5 million. The

same judicial actions could have supported Tax Court

jurisdiction over any appeal regarding an award determination

involving Shands’s claims for proceeds collected “as a result”

of those actions against the Swiss bankers or “any related

actions.” 26 U.S.C. § 7623(b)(1).

But Shands did not contend that the Tax Court’s

jurisdiction over his putative related-action claim stems from

the Service’s actions against the Swiss bankers. Instead, as our

opinion notes, his counsel affirmatively and repeatedly

disavowed that theory of jurisdiction. Op. 15-16. He therefore

forfeited the point. See Int’l Longshore & Warehouse Union v.

NLRB, 971 F.3d 356, 363 (D.C. Cir. 2020).