Doe v. Internal Revenue Service et al

IN THE UNITED STATES DISTRICT COURT FOR THE
MIDDLE DISTRICT OF TENNESSEE
NASHVILLE DIVISION
JOHN DOE,
Plaintiff,
v.
INTERNAL REVENUE SERVICE, et al.,
Defendants.
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NO. 3:24-cv-00019
JUDGE RICHARDSON
MEMORANDUM OPINION
Plaintiff John Doe initiated this lawsuit by filing a complaint (Doc. No. 1, “Complaint”) in
this Court. Defendant1 Internal Revenue Service (“IRS”) filed a motion to dismiss (Doc. No. 34,
“Motion”) with an accompanying memorandum (Doc. No. 34-1, “Opening Brief”). Plaintiff has
filed a response to the Motion (Doc. No. 40, “Response”), and Defendant has filed its reply in
further support of the Motion (Doc. No. 44, “Reply”). The Court held oral argument on the Motion
on September 11, 2025.
Via the Motion, Defendant seeks dismissal of the Complaint under Federal Rule of Civil
Procedure 12(b)(6). (Doc. No. 34 at 1). For the reasons stated herein, the Motion will be
GRANTED, and this action will be dismissed.
1 The United States and the Department of the Treasury are also named defendants in this action. For the
sake of clarity, the Court uses the term “Defendant” herein to refer exclusively to the IRS because it is the
sole movant with respect to the instant Motion.
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BACKGROUND2
This case arises out of a dispute between Plaintiff and Defendant concerning Plaintiff’s
whistleblower award under 26 U.S.C. § 7623(a).3 This case revolves, in brief, around the
challenges brought by Plaintiff against certain IRS guidance with respect to the determination of
IRS whistleblower awards under 26 U.S.C. § 7623(a). Plaintiff brings both adjudicatory challenges
related to the IRS’s adjudication of his own Whistleblower Award as well as rulemaking
challenges to the guidance underlying the determination of awards like that of the Plaintiff’s. (Doc.
No. 1 at ¶¶ 43-146).
1. 	Statutory Background
Before addressing the factual and legal background underpinning this case, the Court
discusses the legal regimen governing IRS whistleblower awards as necessary.
The whistleblower award regime is governed by 26 U.S.C. § 7623. In the Taxpayer Bill of
Rights, § 1209, 110 Stat. 1452 (1996), Congress amended the whistleblower award statute to read
as follows:
The Secretary, under regulations prescribed by the Secretary, is authorized to pay
such sums as he deems necessary for—
(1) detecting underpayments of tax, and
(2) detecting and bringing to trial and punishment persons guilty of violating the
internal revenue laws or conniving at the same,
in cases where such expenses are not otherwise provided for by law. Any amount
2 The facts herein are taken from the Complaint. For purposes of the instant Motion, the facts in the
Complaint are accepted as true, except to the extent that they are qualified herein (as, for example, by
“Plaintiff alleges”) to denote that they are not being taken as true but instead are set forth merely to make
clear what a party claims to be true. Throughout this opinion, the Court forgoes any such qualifiers for any
fact that it is accepting as true, stating those facts without qualification even though it is aware that any
such (alleged) fact ultimately might not prove to be true.
3 When referring to Plaintiff’s whistleblower award specifically, that is, Plaintiff’s whistleblower award
under 26 U.S.C. § 7623(a,) the (allegedly inadequate) amount of which serves as the basis of this litigation
and which is described in further detail below, the Court endeavors to refer to it as the “Whistleblower
Award.”
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payable under the preceding sentence shall be paid from the proceeds of amounts
(other than interest) collected by reason of the information provided, and any
amount so collected shall be available for such payments.
26 U.S.C. § 7623 (1996). (Doc. No. 1 at ¶ 9).
On December 20, 2006, Congress again amended the whistleblower statute to, in the
relevant part, include a new section: § 7623(b). 26 U.S.C. § 7623(b). (Doc. No. 1 at ¶ 21). Section
7623(b) carved out a second category of whistleblower awards for those whistleblower claims
filed on or after December 20, 2006, with collected proceeds exceeding $2,000,000, and, in the
event the action was against an individual taxpayer, where that individual taxpayer’s gross income
exceeded $200,000. See 26 U.S.C. § 7623(b)(5). (Doc. No. 1 at ¶ 21). For ease of reference and
consistent with the parties’ briefing, awards under § 7623(b) herein will be referred to as § 7623(b)
awards.
The statutory language codified in 1996 remained in the Code as 26 U.S.C. § 7623(a).
Section 7623(a) thus continues to govern whistleblower awards made in response to claims filed
before December 20, 2006 (that is, those awards previously made under 26 U.S.C. § 7623 (1996)),
as well as those whistleblower awards filed for by award claimants on or after December 20, 2006
that do not otherwise meet the statutory requirements in 26 U.S.C. § 7623(b). (Doc. No. 1 at ¶ 21).
For ease of reference, the types of awards under both 26 U.S.C. § 7623 (1996) and 26 U.S.C. §
7623(a), whether filed before, on, or after December 20, 2006, will be referred to, generally
following the style in the parties’ briefing, as § 7623(a) awards. For present purposes, it is
sufficient to note that Plaintiff’s Whistleblower Award is a § 7623(a) award.4
4 Although the Complaint includes a request to this Court that Plaintiff’s Whistleblower Award be
categorized as a § 7623(b) claim, at the Court’s September 11, 2025 hearing on the Motion, Plaintiff’s
counsel confirmed that Plaintiff was no longer contending that Plaintiff’s Whistleblower Award was a
7623(b) award. (Doc. No. 57 at 26:10-14).
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Congress has provided no rules or standards for § 7623(a) awards, other than to say that
the Secretary of the Treasury may make under § 7623(a) whatever awards “he deems necessary.”
26 U.S.C. § 7623(a). By contrast, Congress provided some standards for § 7623(b) awards,
including 	that 	an 	award 	be 	“at 	least 	15 	percent 	but 	not 	more 	than 	30 	percent 	of
the proceeds collected as a result of the action.” 26 U.S.C. § 7623(b)(1).
As relevant here, after the 1996 amendments to the whistleblower award statute, the IRS
promulgated (without notice and comment) the so-called “IRM $10 Million Fixed Maximum
Dollar Cap,” as laid out first in IRS Policy Statement 4-27 (2004),5 which was issued on August
13, 2004.6 (Doc. No. 1 at 2, ¶¶ 14-20) (discussing IRS Policy Statement 4-27 (2004)). The IRM
$10 Million Fixed Maximum Dollar Cap was continually reissued, without notice and comment,
after the 2006 amendments to the whistleblower award statute. See e.g., IRS Policy Statement 4-
27 (2004); IRM § 25.2.2.9.1 (2008); IRM § 25.2.2.9.1 (2010); IRM §§ 25.2.2.5.3, 25.2.2.5.4
(2018); IRM Exhibit 25.2.2-1 (2018); IRM §§ 25.2.2.6.3, 25.2.2.6.4 (2019); IRM § 25.2.2 (2023)
(collectively, the “IRM $10 Million Fixed Maximum Dollar Cap” or the “Cap”). (Doc. No. 1 at ¶¶
22, 23, 30-35). Until 2010, the IRM $10 Million Fixed Maximum Dollar Cap applied to all §
7623(a) awards and fixed the maximum monetary amount available under these awards at
$10,000,000. Compare IRM § 25.2.2.9.1 (2010) with IRM § 25.2.2.9.1 (2008). (Doc. No. 1 at ¶¶
22-23).
IRS 	Policy 	Statement 	4-27 	also 	prescribed a 	tiered 	award 	system 	that 	separated
whistleblower awards into three tiers. (Doc. No. 1 at ¶ 18) (citing IRS Policy Statement 4-27
5 A copy of IRS Policy Statement 4-27 (2004) was filed as Exhibit B to the Complaint (Doc. No. 1-3).
6 IRM stands for “Internal Revenue Manual,” a handbook of internal IRS guidance.
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(2004)). Specifically, the tiered award system provided that a whistleblower was entitled to either
15 percent, 10 percent, or 1 percent of total collected proceeds based on how helpful the
information the whistleblower provided was to the recovery of the proceeds. (Id.).
In 2008, the IRM was updated again, this time “to provide that tax whistleblower awards
covered under [] § 7623(a), whether filed before or after December 20, 2006, would continue to
be limited to the above described three award percentage tiers of 15 percent, 10 percent, and one
percent.” (Doc. No. 1 at ¶ 22). With these changes, “[t]he IRM also continued to impose the IRM
$10 Million Fixed Maximum Dollar Cap on all [] § 7623(a) awards.” (Doc. No. 1 at ¶ 22) (citing
IRM § 25.2.2.9.1 (2008)).7
In 2010, the IRS amended the IRM without notice and comment to provide that the IRM
$10 Million Fixed Maximum Dollar Gap would apply to claims for § 7623(a) awards (hereinafter
“§ 7623(a)-award claim(s)”) only if they were filed before July 1, 2010. (See generally Doc. No.
1 at ¶ 23) (citing IRM § 25.2.2.9.1 (2010)) (discussing the 2010 amendment to the IRM generally).8
This amendment to the IRM also increased “award percentages from the maximum of 15 percent
to a range of 15 to 30 percent” for those 7623(a)-award claims filed on or after July 1, 2010. IRM
§ 25.2.2.9.1 (2010). (Id.). In effect, then, “the IRS decided that [] § 7623(a)[-award] claims filed
[on or] after July 1, 2010, would no longer be subject to the IRM $10 Million Fixed Maximum
Dollar Cap and would be eligible for an award calculation of between 15 and 30 percent, whereas
[] § 7623(a)[-award] claims filed before July 1, 2010, were still subject to the IRM $10 Million
7 A copy of IRM § 25.2.2.9.1 (2008) was filed as Exhibit C to the Complaint (Doc. No. 1-4).
8 A copy of IRM § 25.2.2.9.1 (2010) was filed as Exhibit D to the Complaint (Doc. No. 1-5).
The Court notes, for purposes of providing context, that IRM § 25.2.2.9.1 (2010) further provided that
“[f]or award claims filed prior to December 20, 2006 (Exhibit 25.2.2-13) the award will be based on the
policy in effect at the time the claim was filed, with one exception relating to payment of refund protection
claims and criminal fines.” This, in effect, reimposed a $100,000 cap for award submissions prior to August
26, 1997, and a $2,000,000 cap for awards submitted between August 26, 1997, and August 13, 2004.
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Fixed Maximum Dollar Cap and a lower award percentage” tier of either 15 percent, 10 percent,
or 1 percent. (Id.).
At issue here, however, is the IRS amendment to the IRM issued on January 12, 2018 (the
“2018 IRM Award Policy Change” or the “Policy Change”). (Doc. No. 1 at ¶¶ 30-34).9 The 2018
IRM Award Policy Change provided for “three separate . . . classes of whistleblower award
claimants.” (Doc. No. 1 at ¶ 33). Therefore, the Court describes the 2018 IRM Award Policy
Change, and its provisions with respect to three different kinds of award claims, in the following
paragraph.
First, for § 7623(a)-award claims filed prior to December 20, 2006 (including Plaintiff’s
Whistleblower Award), the 2018 IRM Award Policy Change maintained both the $10 Million
Fixed Maximum Dollar Cap and the three-tiered (1 percent, 10 percent, and 15 percent) percentage
limitation on awards made on such § 7623(a) claims. (Id. at ¶ 33(a)). Second, with respect to §
7623(a)-award claims filed on or after December 20, 2006, the 2018 IRM Award Policy Change
provided both that the $10 Million Fixed Maximum Dollar Cap did not apply and that claimants
“may receive an award of between 15 and 30 percent of collected proceeds.” (Id. at ¶ 33(b)). The
third class of award claimants concerned those making claims for § 7623(b) awards (hereinafter
“§ 7623(b)-award claim(s)”). (Id. at ¶ 33(c)). With respect to these § 7623(b)-award claims, the
Policy Change provided that those making such award claims are entitled to an award of “15 to 30
percent of collect proceeds,” are “entitled to award calculation factors in Treas. Reg. § 301.7623-
4, and are not subject to the IRM $10 Million Fixed Maximum Dollar Cap.” (Id.).
9 For the actual provisions of the IRM implementing the Policy Change, see IRM §§ 25.2.2.5.3, 25.2.2.5.4
(2018) and IRM Exhibit 25.2.2-1 (2018).
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The 2018 IRM Award Policy Change was enacted without notice and comment. (Id. at ¶
32). 	The 2018 IRM Award Policy Change was republished in 2019 under IRM §§ 25.2.2.6.3,
25.2.2.6.4. (Id. at ¶ 30).
On March 13, 2023, the IRS reissued both the IRM $10 Million Fixed Maximum Dollar
Cap and the 2018 IRM Award Policy Change in IRM § 25.2.2 (2023). (Id. at ¶ 34). The March 13,
2023 version of IRM § 25.2.2 “was in place and presumed to be relied on by the IRS in the present
matter as it was cited in Plaintiff’s” Final Award Determination.10 (Id. at ¶ 35).
Meanwhile, on August 12, 2014, new regulations were issued (with notice and comment)
to govern whistleblower awards under 26 U.S.C. § 7623—those being Treas. Reg. §§ 301.7623-1
through -4. (Doc. No. 1 at ¶ 24). As pertinent to the present dispute, Treas. Reg. §§ 301.7623-1
through -3 contain identical “Effective/applicability date” sections providing that:
This rule is effective on August 12, 2014. This rule applies to information
submitted on or after August 12, 2014, and to claims for award under sections
7623(a) and 7623(b) that are open as of August 12, 2014.
Treas. Reg. §§ 301.7623-1(f), 301.7623-2(f), 301.7623-3(f) (emphasis added).
On the other hand, Treas. Reg. § 301.7623-4’s “Effective/applicability date” subsection
provides that:
This rule is effective on August 12, 2014. This rule applies to information
submitted on or after August 12, 2014, and to claims for award under section
7623(b) that are open as of August 12, 2014.
Treas. Reg. § 301.7623-4(e) (emphasis added).
As for the substance of the regulations, Treas. Reg. § 301.7623-1 provides that “the
Whistleblower Office may pay an award under section 7623(a) in a suitable amount.” Treas. Reg.
§ 301.7623-1(a). And Treas. Reg. § 301.7623-2 provides definitions for the regulatory scheme.
10 A copy of pertinent parts of IRM § 25.2.2 (2023) was filed as Exhibit E to the Complaint (Doc. No. 1-
6).
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As for Treas. Reg. § 301.7623-3, its subsection (a) provides that the Whistleblower Office
“will pay awards under section 7623(a) and pay and determine awards under section 7623(b)
pursuant to the rules of this section.” Treas. Reg. § 301.7623-3(a). And its subsection (b) provides
further requirements for the payment of awards under § 7623(a), including that:
. . . the Whistleblower Office will communicate a preliminary award
recommendation under section 7623(a) and §§ 301.7623-1 through 301.7623-4 to
the whistleblower by sending a preliminary award recommendation letter that states
the Whistleblower Office’s preliminary computation of the amount of the collected
proceeds, recommended award percentage, recommended award amount (even in
cases when the application of § 301.7623-4 results in a reduction of the
recommended award amount to zero), and a list of the factors that contributed to
the recommended award percentage.
Treas. Reg. § 301.7623-3(b)(1) (emphasis added).
The cross-reference to Treas. Reg. § 301.7623-4 in the above quote, as well as another
cross-reference to Treas. Reg. § 301.7623-4 in Treas. Reg. § 301.7623-3(b)(2), is key to the instant
dispute as Treas. Reg. § 301.7623-4(b) “includes . . . [a] set of positive and negative factors to be
considered in evaluating certain award claims and determining the appropriate award percentage.”
(Doc. No. 1 at ¶ 27).
Notably, no fixed dollar cap is provided for specifically in Treas. Reg. §§ 301.7623-1
through -4. (Id. at ¶ 29).
2. 	Factual Background
The Court next provides a brief overview of Plaintiff’s claim(s) and Whistleblower Award
in particular. “Beginning in the 1990s, Plaintiff began providing the IRS with information related
to a Fortune 100 company (“Taxpayer”). In short, Plaintiff’s submission unveiled Taxpayer’s
years-long scheme comprised of the improper creation and use of an offshore company.” (Id. at ¶
38). Plaintiff “provided information about how Taxpayer manipulated both financial reporting and
tax liabilities to their own and third party/counter party benefit.” (Id. at ¶ 40).
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Plaintiff first provided information to the IRS on August 24, 1995, when he sent “an 11-
page memorandum and approximately 304 pages of attachments that were separated into 22
various categories of documents” with his Form 211 submission.11 (Id. at ¶ 42(a)). On April 13,
1998, the IRS “rejected Plaintiff’s Form 211.” (Id. at ¶ 42(d)). On April 5, 2005, “Plaintiff again
submitted a Form 211, that also included another approximately 300 pages of evidence and
narrative describing Taxpayer’s tax noncompliance,” and the next day, “Plaintiff’s counsel . . .
sent an email to various IRS Criminal Investigations . . . representatives . . . that included the April
5, 2005 Form 211 submission and related substantiating evidence.” (Id. at ¶¶ 42(d), 42(e)). On
May 27, 2005, “Plaintiff met with IRS Special Agents . . . [and] detail[ed] the precise nature of the
tax noncompliance at issue using his detailed knowledge and experience to inform the government
of the specific tax issues at hand.” (Id. at ¶ 42(h)). On January 23, 2006 “Plaintiff’s counsel . . .
sent the IRS a new Form 211 on behalf of Plaintiff,” and on February 7, 2006, “the IRS sent
Plaintiff a letter requesting additional information.” (Id. at ¶¶ 42(i), 42(k)). On February 20, 2006,
Plaintiff responded to the IRS’s request, and “sent correspondence . . . describing Taxpayer’s tax
evasion scheme as well as a more thorough list of documents [already] provided.” (Id. at ¶ 42(l)).
Much later, on February 8, 2023, after additional correspondence from Plaintiff’s counsel,
“the IRS issued Plaintiff an initial Preliminary Award Recommendation Letter (or, “PARL”).” (Id.
at ¶ 42(o)).12 The PARL “recommended an award of 15 percent less 5.7 percent of the award due
to the Budget Control Act of 2011, [and] stated that the total amount of proceeds collected by the
IRS was $398,322,008.” (Doc. No. 1 at ¶ 42(o)) (citing Doc. No. 1-7 at 4). The PARL also provided
that in “accordance with Treasury Regulation Section 301.7623-4, [the Whistleblower Office] did
11 A Form 211 “is the standard form for a whistleblower to submit information and request an award.” (Doc.
No. 1 at 6 n.2).
12 A copy of the PARL was filed as Exhibit F to the Complaint (Doc. No. 1-7).
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not conduct a positive and negative factor analysis because we did not find any authority to support
an increase above the maximum $10 million allowed.” (Doc. No. 1 at ¶ 42(o)) (quoting Doc. No.
1-7 at 4). On July 5, 2023, the IRS sent Plaintiff a “Revised PARL Package,”13 which “again
recommended a $10,000,000 award for Plaintiff. However, the ‘Summary Report’ now stated that
the ‘Preliminary tax, penalties, interest, and other amounts collected based on information
provided by Whistleblower’ totaled $1,616,837,238.00. The Summary Report also stated that ‘[i]n
accordance with Treasury Regulation Section 301.7623-4, [the Whistleblower Office] did not
conduct a positive and negative factor analysis because we did not find any authority to support
an increase award above the maximum $10 million allowed.’” (Id. at ¶ 42(p)) (quoting Doc. No.
1-8 at 7). On August 2, 2023, Plaintiff’s counsel “submitted a 19-page memorandum to IRS
Whistleblower Office Director John Hinman . . . arguing that the IRM $10 Million Fix Maximum
Dollar Cap imposed on Plaintiff’s [Whistleblower Award] was invalid in several ways.” (Id. at ¶
42(q)).14
On September 7, 2023, the IRS sent Plaintiff a “Final Award Decision Under Internal
Revenue Code (IRC) Section 7623(a). [(“Final Award Determination”)].” (Id. at ¶ 42(r)) (citing
Doc. No. 1-10).15 The Final Award Determination informed Plaintiff that the “Whistleblower
Office had reviewed the comments you provided on the preliminary award recommendation. The
Whistleblower Office has made a final decision that you are entitled to an award of $10,000,000.”
(Doc. No. 1 at ¶ 42(r)) (quoting Doc. No. 1-10 at 1). In the relevant part, the Final Award
Determination also included a Determination Report, which provided:
13 A copy of the revised PARL package was filed as Exhibit G to the Complaint (Doc. No. 1-8).
14 A copy of this memorandum was filed as Exhibit H to the Complaint (Doc. No. 1-9).
15 A copy of the Final Award Determination was filed as Exhibit I to the Complaint (Doc. No. 1-10).
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In 	accordance 	with 	Treasury 	Regulation 	Section 	301.7623-4, 	[the
Whistleblower Office] did not conduct a positive and negative factor analysis
because we did not find any authority to support an increase award above the
maximum $10 million allowed.
The claim was filed before December 20, 2006, and is subject to the Pre-
Enactment rules in effect at that time. The pre-amendment awards program, IRC §
7623, applies to information provided to the Internal Revenue Service (IRS) prior
to December 20, 2006 (the effective date of The Tax Relief and Health Care Act of
2006 (“TRHCA”), and limits awards to 15%, up to a $10 million cap.
(Doc. No. 1-10 at 2).
On September 20, 2023, Plaintiff’s counsel submitted another letter to the IRS “again
outlining how the Defendants failed to properly follow the APA in deciding to impose the IRM
$10 Million Fixed Maximum Dollar Cap and requesting a meeting to discuss the issues at play.”
(Doc. No. 1 at ¶ 42(s)). Finally, on September 27, 2023, the IRS sent a second Final Award
Determination, which “largely mirrored” the one sent on September 7, 2023 by again “imposing
the IRM $10 Million Fixed Maximum Dollar Cap and stating that the ‘claim was filed before
December 20, 2006, and is subject to the Pre-Enactment rules in effect at that time.’” (Doc. No. 1
at ¶ 42(t)) (quoting Doc. No. 1-11 at 4).16
3. 	Plaintiff’s Claims
Plaintiff brings challenges to both the IRM $10 Million Fixed Maximum Dollar Cap and
the 2018 IRM Award Policy Change. (Doc. No. 1 at ¶¶ 43-146). The Complaint comprises two
counts (Counts IV and VIII) challenging the adjudication of Plaintiff’s § 7623(a) Whistleblower
Award, three counts (Counts I, II, III) challenging the rulemaking underlying—as well as the
substance of—the IRM $10 Million Fixed Maximum Dollar Cap , and three counts (Counts V, VI,
16 A copy of the second Final Award Determination was filed as Exhibit J to the Complaint (Doc. No. 1-
11).
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and VII) challenging the rulemaking underlying—as well as the substance of—the 2018 IRM
Award Policy Change. (Id.).17
Turning first to the adjudicatory challenges, Plaintiff challenges the application of the IRM
$10 Million Fixed Maximum Dollar Cap (Count IV) and the 2018 IRM Award Policy Change
(Count VIII) as applied to Plaintiff in “the determination of Plaintiff’s [Whistleblower Award].”
(Id. at ¶¶ 92, 145). More particularly, the Complaint alleges that “both Treas. Reg. § 301.7623-1
through -4 and IRM Exhibit 25.2.2-1, in place at the time of Plaintiff’s Final Award Determination,
as well as the applicable regulation at the time Plaintiff filed [his claim], contained several positive
and negative factors for agency officials to consider in calculating individual whistleblower
awards” and that the application of the IRM $10 Million Fixed Maximum Dollar Cap and the 2018
IRM Award Policy Change “cut short” the proper individualized determination of the award under
these factors. (Id. at ¶¶ 88, 141). Plaintiff further alleges that the IRS “offered no explanation or
reasoned analysis” in applying the Cap or the Policy Change to the determination of his
Whistleblower Award. (Id. at ¶¶ 89, 142). In effect, then, Plaintiff argues that the Cap “effectively
removes and replaces the analysis anticipated by Treas. Reg. 301.7623-1(a), 301.7623-3(b), and
301.7623-4(b).” (Id. at ¶ 90).
With respect to the rulemaking challenges to the IRM $10 Million Fixed Maximum Dollar
Cap, Plaintiff alleges that the Cap is invalid because it (1) is inconsistent with applicable
Department of the Treasury regulations in Treas. Reg. §§ 301.7623-1 through -4 (Count I);18 (2);
17 Although the Court acknowledges that Counts I, II, III, V, VI, and VII also challenge the substance of
the Cap and the Policy Change—and not just the rulemaking process by which they were promulgated—
for the sake of brevity, the Court generally refers to these counts as making rulemaking challenges.
18 With respect to whether Count I is properly categorized as a rulemaking challenge to the Cap’s validity,
the Court notes that Count I appears to conflate the notion that the Cap is “[i]nconsistent with [a]pplicable
[r]egulations,” (Doc. No. 1 at 21), with the idea that the determination of Plaintiff’s Whistleblower Award
was flawed based on the application of the Cap. (Id. at ¶ 50). To the extent there is doubt here, the Court
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was promulgated by the IRS without adequate notice and opportunity for comment (Count II); and
(3) is arbitrary and capricious due to the IRS’s failure to provide any explanation or reasoned
analysis for the policy (Count III). (Id. at ¶¶ 43-78). In effect, Counts I, II, and III challenge the
adoption of the IRM $10 Million Fixed Maximum Dollar Cap.
With respect to the rulemaking challenges to the 2018 IRM Award Policy Change, Plaintiff
alleges that the Policy Change is invalid because it (1) is inconsistent with applicable Department
of the Treasury regulations in Treas. Reg. §§ 301.7623-1 through -4 (Count V); (2) was
promulgated by the IRS without adequate notice and opportunity for comment (Count VI); and (3)
is arbitrary and capricious due to the IRS’s failure to provide any explanation or reasoned analysis
for the policy (Count VII). (Id. at ¶¶ 94-131). In effect, Counts V, VI, and VII challenge the
retention in 2018 of the IRM $10 Million Fixed Maximum Dollar Cap as to awards like Plaintiff’s,
as opposed to the Cap’s implementation in the first place.
4. 	Relief Requested
Plaintiff requests various kinds of relief. Plaintiff does request a specific kind of relief on
Count I, (id. at ¶ 51) (“The IRM $10 Million Fixed Maximum Dollar Cap . . . should be set aside
under 5 U.S.C. § 706(2)(A)”), and Count V, (id. at ¶ 102) (“The 2018 IRM Award Policy Change
. . . should be set aside under 5 U.S.C. § 706(2)(C)”). So, at least this kind of relief (the setting
understands Count I to be a rulemaking challenge to the validity of the Cap. The Court’s understanding of
Count I is buttressed by the parties’ briefing on the Motion. In their Opening Brief, Defendant categorizes
Count I, along with Counts II, III, V, VI, and VII, as a rulemaking challenge (i.e., a challenge to the validity
of the Cap). (Doc. No. 34-1 at 21-22). In his Response, Plaintiff does not contest Defendant’s
characterization, and instead, like the Court does here, categorizes only Counts IV and VIII as challenges
to the IRS’s adjudication of Plaintiff’s Whistleblower Award. (Doc. No. 40 at 3, 8). Moreover, the relief
specifically requested under Count I—that the Cap “be set aside under 5 U.S.C. § 706(2)(A)”—clearly
suggests that Count I is properly understand as a rulemaking challenge to the validity of the Cap. (Doc. No.
1 at ¶ 51).
To the extent that Plaintiff intended for Count I to be a challenge to the adjudication of his Whistleblower
Award, Count I—like Counts IV and VIII—would also be dismissed under Rule 12(b)(6) as presenting a
challenge to an unreviewable agency action under 5 U.S.C. § 701(a)(2).
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aside of particular respective IRM provisions) is associated with particular counts. However, not
all of Plaintiff’s requested relief is requested in connection with particular counts. Where the “relief
demanded” is “lump[ed] together . . . at the end of the complaint . . . courts can interpret such
complaints to determine which remedies apply to [which counts].” Nickell v. Bank of America,
N.A., No. 11-2006-STA-DKV, 2012 WL 394467, at *5 (W.D. Tenn. Feb. 6, 2012) (interpreting a
complaint to determine which remedies were requested of particular defendants). See also In re
Dougal, 395 B.R. 880, 886 (Bankr. W.D. Pa. 2008) (construing a complaint with “only a single
prayer for relief section at the end of the entire pleadings” to find a prayer for relief under a
particular count). The Court has done so here and (for fairly obvious reasons) construes the forms
of requested relief (a) targeted at the adjudication of Plaintiff’s Whistleblower Award as being
requested under the adjudicatory challenges in Count IV and Count VIII; and (b) targeted at the
validity of the 2018 IRM Award Policy Change and the IRM $10 Million Fixed Maximum Dollar
Cap writ large as being requested under the rulemaking challenges to the Cap and the Policy
Change in Count I, Count II, Count III, Count V, Count VI, and Count VII.
Based on this approach, with respect to his adjudicatory, as-applied challenges in Count
IV and Count VIII,19 Plaintiff seeks to have this Court “[p]ermanently enjoin the application of
the IRM $10 Million Fixed Maximum Dollar Cap specifically outlined in IRM Exhibit 25.2.2-1,
Policy Statement 4-27 and the 2018 IRM Award Policy Change described in IRM § 25.2.2.6.3,
with respect to Plaintiff’s Final Award Determination.” (Doc. No. 1 at 43). Plaintiff also requests
that this Court “[i]ssue an order finding that Plaintiff is entitled to the 15 percent award approved
by the IRS as set forth in its Final Award Determination without application of the IRM $10
19 As explained in a footnote above, the Court understands Count I to make not an adjudicatory challenge
to the determination of Plaintiff’s Whistleblower Award, but instead only a rulemaking challenge to the
validity of the Cap.
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Million Fixed Maximum Dollar Cap,” or “[i]issue an order remanding Plaintiff’s claim (Claim
Number 	2013-008202) back to the IRS Whistleblower Office to issue a revised award
determination in accordance with Treasury Regulations at 301.7623-1 to -4 or their predecessors
to account for a ‘suitable amount’ utilizing the applicable factors for an award determination with
no fixed maximum dollar cap.” (Id. at 44).20
With respect to the rulemaking challenges, Plaintiff requests that this Court (1) “[r]emand
the 2018 IRM Award Policy Change described in IRM § 25.2.2.6.3 and IRM Exhibit 25.2.2-1 to
the IRS for reconsideration in compliance with the APA with consideration of treating all filers
similarly with respect to the application of IRM $10 Million Fixed Maximum Dollar Cap”; (2)
“[e]nter a judgement declaring that both the promulgation and application of the IRM $10 Million
Fixed Maximum Dollar Cap specifically outlined in IRM Exhibit 25.2.2-1, Policy Statement 4-27
and the 2018 IRM Award Policy Change described in IRM § 25.2.2.6.3, are arbitrary, capricious,
otherwise not in accordance with law, or otherwise in excess of statutory jurisdiction, authority, or
limitation, or short of statutory right, within the meaning of the Administrative Procedure Act”; or
(3) “[i]ssue an order vacating and setting aside IRM $10 Million Fixed Maximum Dollar Cap
specifically outlined in IRM Exhibit 25.2.2-1, Policy Statement 4-27 and the 2018 IRM Award
Policy Change described in IRM § 25.2.2.6.3, pursuant to the Administrative Procedure Act.” (Id.
at 43-44).
20 Plaintiff also requests that this Court “[i]ssue an order remanding Plaintiff’s whistleblower claim . . . back
to the IRS Whistleblower Office to issue a revised award determination as a[] []§ 7623(b) claimant.” (Doc.
No. 1 at 44). As discussed above, because Plaintiff’s counsel confirmed that Plaintiff no longer contends
that Plaintiff’s Whistleblower Award is a § 7623(b) award, the Court does not consider this requested relief.
(Doc. No. 57 at 26:10-14).
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5. 	Defendant’s Motion
Defendant brings its Motion pursuant to Rule 12(b)(6) and based on what the Court
categorizes below as five grounds.21 Of these grounds, two are targeted at Plaintiff’s adjudicatory
challenges and three are targeted at Plaintiff’s rulemaking challenges.22
With respect to the adjudicatory challenges in Count IV and Count VIII, Defendant argues
in its Opening Brief and its Reply that Plaintiff may not challenge his Whistleblower Award
because the IRS’s decision to award Plaintiff’s § 7623(a) award is “committed to agency discretion
by law” and therefore under 5 U.S.C. § 701(a)(2) is not subject to judicial review. (Doc. No. 34-1
at 13). In the event that the Court does find that the adjudication itself is reviewable, the Defendant
in its Opening Brief argues that the adjudicatory counts “must be dismissed because they fail to
state a plausible claim for relief” because “[b]y its plain terms, [Treas. Reg. § 301.7623-4] does
not apply to [Plaintiff’s Whistleblower Award].” (Doc. No. 34-1 at 17).
As for the rulemaking challenges to the Cap and the Policy Change in Count I, Count II,
Count III, Count V, Count VI, and Count VII, Defendant argues variously that these Counts must
be dismissed because: (1) Plaintiff “cannot maintain a facial rulemaking challenge that is
inextricably intertwined with a prohibited adjudicatory challenge [i.e., the challenge to the
adjudication in Count IV and Count VIII]”; (2) “[a]n APA challenge may only be brought against
a final agency action,” which (according to Plaintiff) the IRM $10 Million Fixed Maximum Dollar
21 As will be discussed in more detail below, although most of Defendant’s Motion may be categorized as
properly brought under Rule 12(b)(6), the Motion is properly categorized as brought instead under Rule
12(b)(1) to the extent that it is based on an alleged lack of standing.
22 Defendant’s Opening Brief initially raised a limitations defense to Plaintiff’s rulemaking
challenges (Doc. No. 34-1 at 23). However, following the decision in Corner Post, Inc. v. Bd. Of Governors
of Fed. Reserve Sys., 144 S. Ct. 2440 (2024), Defendant elected to “not a argue at this stage that the statute
of limitations (28 U.S.C. § 2401(a)) applies.” (Doc. No. 44 at 9 n. 15).
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Cap “is not”; and (3) Plaintiff “lacks standing to facially challenge” the IRS guidance in question
because he does not allege that he will encounter this guidance in the future. (Doc. No. 34-1 at 19-
24; Doc. No. 44 at 13).
LEGAL STANDARD
To begin with, it is important to note under which legal standard (and indeed under which
Federal Rule) the Court will be adjudicating the respective challenges brought by Defendant.
Defendant brings the entirety of its Motion purportedly under Rule 12(b)(6). Although this reliance
on Rule 12(b)(6) is apt for the most part, it is inapt in one sense. Specifically, with respect to
Defendant’s challenge to Plaintiff’s standing to bring his rulemaking challenges to the Cap and to
the Policy Change, Defendant’s motion is better categorized as being brought under Rule
12(b)(1)—which authorizes motions to dismiss for lack of subject-matter jurisdiction—as a
challenge to this Court’s subject-matter jurisdiction over those challenges. See Allstate Ins. Co. v.
Global Medical Billing, Inc., 520 F. App’x 409, 410-11 (6th Cir. 2013) (citations omitted)
(“Although the parties and the district court considered the issue of standing as a failure to state
a claim under Rule 12(b)(6), it is more properly considered an attack on the court's subject-matter
jurisdiction under Rule 12(b)(1).”). Thus, this Court will analyze Defendant’s challenge to
standing “under the standard of review of a . . . 12(b)(1) motion.” Kallai v. Jatola Holmes, LLC,
No. 5:21-CV-56, 2021 WL 5961626, at *3, n.1 (N.D Ohio Dec. 16, 2021).
1. 	Motion to Dismiss Based on Rule 12(b)(1)
As suggested above, standing is (axiomatically) “an issue of the court’s subject matter
jurisdiction under Federal Rule of Civil Procedure 12(b)(1).” Lyshe v. Levy, 854 F.3d 855, 857
(6th Cir. 2017). See also Kepley v. Lanz, 715 F.3d 969, 972 (6th Cir. 2013) (“Standing goes to [a
c]ourt’s subject matter jurisdiction” (citations omitted) (internal quotation marks omitted)).
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Like any kind of challenge to subject-matter jurisdiction, a challenge specifically to the
plaintiff’s standing can be in the form of either a facial attack or a factual attack. See Kale v.
Procollect, Inc., 547 F. Supp. 3d 793, 796 (W.D. Tenn. 2021) (“Challenges to standing can be
facial or factual.”); In re Saffold, 373 B.R. 39, 43 (Bankr. N.D. Ohio 2007) (“A challenge to
standing may be either a facial attack on a pleading or a factual attack.”).
“A facial attack on standing challenges the legal sufficiency of the complaint, whereas a
factual challenge against standing questions whether the complaint's factual assertions reflect
reality.” Shumway v. Neil Hosp., Inc., 570 F. Supp. 3d 585, 588 (W.D. Tenn.) (citing Ohio Nat.
Life Ins. v. United States, 922 F.2d 320, 325 (6th Cir. 1990)).
A review of Defendant’s standing arguments, (Doc. No. 34-1 at 24-25; Doc. No. 44 at 13),
reveals that Defendant brings a facial rather than a factual challenge to Plaintiff’s rulemaking
challenges to the IRM $10 Million Fixed Maximum Dollar Cap and the 2018 Policy Change.
Notably, Defendant argues that Plaintiff “does not allege that he intends to blow the whistle in the
future. He does not allege that he intends to seek a future award from the IRS . . . This means he
lacks standing to seek prospective relief.” (Doc. No. 34 at 24). Defendant’s Opening Brief further
argues that Plaintiff “has not alleged that he will suffer any injury in the future if the guidance
stays in place,” (Id. at 25), and Defendant’s Reply argues that “[Plaintiff] lacks standing to facially
challenge the rule” because “he does not allege that he intends to report new information to the
IRS or file a new claim.” (Doc. No. 44 at 13). Therefore, the Court will consider only the
sufficiency of the Complaint and will (subject to the exceptions that were anticipated in a footnote
above and will be made apparent, consistent with that footnote, in the text below) “accept the
allegations set forth in the Complaint as true” with respect to the standing challenge. Gaylor v.
Hamilton Crossing CMBS, 582 F. App’x. 576, 579 (6th Cir. 2014).
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2. 	Motion to Dismiss Based on Rule 12(b)(6).
The remainder of Defendant’s arguments, including the argument that the IRS’s decision
to award Plaintiff’s Whistleblower Award is unreviewable under 5 U.S.C. § 701(a)(2) are properly
considered as brought under Rule 12(b)(6).23
For purposes of a motion to dismiss under Fed. R. Civ. P. 12(b)(6), the Court must take all
of the factual allegations in the complaint as true. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). To
23 As detailed at the motion-to-dismiss hearing held on September 11, 2025, the Court concludes that a
challenge to reviewability under 5 U.S.C. § 701(a)(2) is properly brought under Rule 12(b)(6) and is not a
challenge to subject-matter jurisdiction reviewable under Rule 12(b)(1). (Doc. No. 57 at 26:15-34:13). The
Court further explains its rationale here.
The Supreme Court has held that “the APA does not afford an implied grant of subject-matter jurisdiction
permitting federal judicial review of agency action.” Califano v. Sanders, 430 U.S. 99, 107 (1977). Instead,
it is 28 U.S.C. § 1331 that “confer[s] jurisdiction on the federal courts to review agency action.” Id. at 105.
Thus, this Court has “subject matter jurisdiction over [Plaintiff’s] APA claim under the federal question
statute, 28 U.S.C. § 1331,” and “absent some other jurisdictional bar, dismissal for lack of subject matter
jurisdiction [(i.e., the basis for a Rule 12(b)(1) motion)] [is] inappropriate.” Haines v. Fed. Motor Carrier.
Safety Admin., 814 F.3d 417, 424 (6th Cir. 2016). See also Jama v. Dep’t of Homeland Sec., 760 F.3d 490,
494 (6th Cir. 2014) (holding that because “the district court had jurisdiction over [plaintiff’s] APA claims
pursuant to the federal question statute, 28 U.S.C. § 1331 . . . dismissal pursuant to 12(b)(1) was
improper.”). Indeed, in Haines, the Sixth Circuit noted that certain threshold questions under the APA, in
Haines specifically whether there had been a final agency action such to permit review, was really a
question of whether a party had “failed to state a claim” and not a question of subject matter jurisdiction.
Haines, 760 F.3d at 424. See also Tennessee v. United States Dep’t of Educ., 615 F. Supp. 3d 807, 820 n.6
(E.D. Tenn. 2022) (citing Haines, 760 F.3d at 424-27) (“[Although] there are threshold questions under the
APA, such questions speak to the failure to state a claim under Rule 12(b)(6) rather than a lack of subject
matter jurisdiction under Rule 12(b)(1)”).
The Sixth Circuit has not ruled explicitly on whether determining if an agency action is committed by
law to agency discretion—such that review is impermissible under 5 U.S.C. § 701(a)(2) — is a question to
be analyzed under Rule 12(b)(6). But the case law above suggests that this issue should be analyzed under
Rule 12(b)(6), as likewise do decisions of the Third, Seventh and Eighth Circuits. See Chehazeh v. Att’y
Gen. of the United States, 666 F.3d 118, 125 n.11 (3rd Cir. 2012) (citing Trudeau v. FTC, 456 F.3d 178,
185 (D.C. Cir. 2006) (noting that the Third Circuit agrees with the “Seventh and Eighth circuits that even
if Congress has committed discretion to [an agency] by law to take or not to take certain actions, it has not
deprived the District Court or us of jurisdiction to consider a plaintiff’s claims that such action was
erroneous pursuant to the APA. The question is whether a plaintiff can state a claim for relief from such
action under the APA.”)). But see Flathead Irrigation Dist. v. Zinke, 725 F. App’x 507, 510 (9th Cir. 2018)
(finding that the Court lacked jurisdiction under 5 U.S.C. § 701(a)(2) of the APA); Sheldon v. Vilsack, No.
11-10487, 2012 WL 1068099, at *7 (E.D. Mich. Mar. 29, 2012) (quoting 5 U.S.C. § 701(a)(2)) (“Courts
do not have subject matter jurisdiction to review agency actions that are ‘committed to agency discretion
by law.’”), aff'd, 538 F. App'x 644 (6th Cir. 2013).
Accordingly, the Court concludes that, as Defendant argues and Plaintiff does not dispute, a motion to
dismiss pursuant to 5 U.S.C. § 701(a)(2) is properly analyzed under Rule 12(b)(6).
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survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true,
to state a claim to relief that is plausible on its face. Id. A claim has facial plausibility when the
plaintiff pleads factual content that allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged. Id. Threadbare recitals of the elements of a cause
of action, supported by mere conclusory statements, do not suffice. Id. When there are well-
pleaded factual allegations, a court should assume their veracity and then determine whether they
plausibly give rise to an entitlement to relief. Id. at 679. A legal conclusion, including one couched
as a factual allegation, neither need be accepted as true on a motion to dismiss, nor are mere
recitations of the elements of a cause of action sufficient. Id.; Fritz v. Charter Twp. of Comstock,
592 F.3d 718, 722 (6th Cir. 2010), cited in Abriq v. Hall, 295 F. Supp. 3d 874, 877 (M.D. Tenn.
2018). Moreover, factual allegations that are merely consistent with the defendant’s liability do
not satisfy the claimant’s burden, as mere consistency does not establish plausibility of entitlement
to relief even if it supports the possibility of relief. Iqbal, 556 U.S. at 678.
In determining whether a complaint is sufficient under the standards of Iqbal and its
predecessor and complementary case, Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007), it may be
appropriate to “begin [the] analysis by identifying the allegations in the complaint that are not
entitled to the assumption of truth.” Iqbal, 556 U.S. at 680. This can be crucial, as no such
allegations count toward the plaintiff’s goal of reaching plausibility of relief. To reiterate, such
allegations include “bare assertions,” formulaic recitation of the elements, and “conclusory” or
“bold” allegations. Id. at 681. The question is whether the remaining allegations—factual
allegations, i.e., allegations of factual matter—plausibly suggest an entitlement to relief. Id. If not,
the pleading fails to meet the standard of Federal Rule of Civil Procedure 8 and thus must be
dismissed pursuant to Rule 12(b)(6). Id. at 683.
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As a general rule, matters outside the pleadings may not be considered in ruling on a motion
to dismiss under Rule 12(b)(6) unless the motion is converted to one for summary judgment under
Rule 56. Fed. R. Civ. P. 12(d). When a document is referred to in the pleadings and is integral to
the claims, it may be considered without converting a motion to dismiss into one for summary
judgment. Doe v. Ohio State Univ., 219 F.Supp.3d 645, 652-53 (S.D. Ohio 2016); Blanch v. Trans
Union, LLC, 333 F. Supp. 3d 789, 791-92 (M.D. Tenn. 2018).
DISCUSSION
1. 	Adjudicatory Challenges
a. 	Judicially Reviewable Standard under 5 U.S.C. § 701(a)(2)
Section 702 of the APA provides that “[a] person suffering legal wrong because of agency
action or adversely affected or aggrieved by agency action within the meaning of a relevant statute,
is entitled to a judicial review thereof.” 5 U.S.C. § 702. The reviewing court shall “hold unlawful
and set aside agency action, findings, and conclusions found to be . . . arbitrary, capricious, an
abuse of discretion, or otherwise not in accordance with the law. . ..” 5 U.S.C. § 706(2). However,
the APA precludes judicial review to the extent that “statutes preclude judicial review” or “agency
action is committed to agency discretion by law.” 5 U.S.C. § 701(a). At issue here is whether the
determination and adjudication of Plaintiff’s Whistleblower Award is committed to IRS discretion
by 5 U.S.C. § 701(a)(2).24
24 In footnotes, the parties engage in a brief discussion of whether review of the Whistleblower Award is
precluded under 5 U.S.C. § 701(a)(1), which provides that judicial review is impermissible where the
“statutes preclude judicial review.” Defendant argues that by “providing for judicial review of § 7623(b)
claims but not § 7623(a) claims,” in the 2006 Amendments to 26 U.S.C. § 7623, “the Court can infer that
Congress intended to preclude judicial review of the latter.” (Doc. No. 34-1 at 16 n.6.). The Court rejects
this argument as contrary to Sixth Circuit precedent. Defendant relies on Fligiel v. Samson, 440 F.3d 747
(6th Cir. 2006), where the Court found that judicial review under 28 U.S.C. § 7463 was barred by 5 U.S.C.
§ 701(a)(1). Yet, in Fligiel, unlike here, there was “clear evidence that Congress did not intend to provide
judicial review of agency action,” including that the statute precluded review “by a Disciplinary Appeals
Board,” which was “the first step to judicial review” under the broader statutory scheme. Id. at 753. There
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Congress commits a decision to agency discretion in “‘those rare circumstances where the
relevant statute is drawn so that a court would have no meaningful standard against which to judge
the agency’s exercise of discretion.’” Weyerhaeuser Co. v. U.S. Fish & Wildlife Serv., 586 U.S. 9,
23 (2018) (quoting Lincoln v. Vigil, 508 U.S. 182, 191 (1993)). “The so-called ‘committed to
agency discretion exception’ is ‘very narrow,’ and is only applicable where ‘statutes are drawn in
such broad terms that in a given case there is no law to apply.’” Castro Bustillo v. McAleenan, No.
3:19-CV-00388, 2020 WL 1274600, at *3 (M.D. Tenn. Mar. 17, 2020) (quoting Jimenez v. Sec'y,
Dep't of Homeland Sec., No. 618-CV-1113-ORL-40-GJK, 2019 WL 175274, at *2 (M.D. Fla. Jan.
11, 2019)). Accordingly, judicial review is “unavailable where a ‘court would have no meaningful
standard against which to judge the agency’s exercise of discretion.’” Jimenez, 2019 WL 175274,
at *2 (quoting Lenis v. U.S. Att’y Gen., 525 F.3d 1291, 1293 (11th Cir. 2008)). 	Though these
circumstances are rare, they do exist, and indeed have been found to exist in contexts relevant to
the instant Motion. As Defendant’s Opening Brief correctly notes, addressing the language of the
whistleblower statute as it existed in 1982,25 the Sixth Circuit held that “[t]he clear language of
is no such clear evidence here, and the only evidence which Defendant presents concerns § 7623(a)’s silence
concerning review in contrast to § 7623(b). Yet, as Plaintiff notes, the Sixth Circuit has expressly held that
“a statute’s silence does not indicate that Congress intended to make agency action unreviewable.” Duncan
v. Muzyn, 833 F.3d 567, 577 (6th Cir. 2016) (citing People’s Gas, Light & Coke Co. v. U.S Postal Serv.,
658 F.2d 1182, 1190 n.4 (7th Cir. 1981)). Accordingly, the Court holds that review of the Whistleblower
Award is not precluded under 5 U.S.C. § 701(a)(1).
25 Notably, 26 U.S.C. § 7623 as it existed in 1982 provided that:
The Secretary or his delegate, under regulations prescribed by the Secretary or his delegate, is
authorized to pay such sums, not exceeding in the aggregate the sum appropriated therefor, as he
may deem necessary for detecting and bringing to trial and punishment persons guilty of violating
the internal revenue laws, or conniving at the same, in cases where such expenses are not otherwise
provided for by law.
Carelli, 668 F.2d at 904 (quoting 26 U.S.C. § 7623).
The statute as it existed in 1982 is identical to the current iteration of 26 U.S.C. § 7623(a) with respect to
the discretion afforded to the Secretary.
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this statute vests the Secretary of the Treasury with discretion in paying such rewards.” Carelli v.
Internal Revenue Serv., when 668 F.2d 902, 904 (6th Cir. 1982).26 And, as Plaintiff admits, 26
U.S.C. § 7623(a) provides the Treasury Secretary with “undeniable” discretion (Doc. No. 40 at 3).
Thus, the Court concludes that 26 U.S.C. § 7623(a) vests the IRS with discretion in determining §
7623(a) whistleblower awards.
However, even where the statute vests an agency with discretion, this is not the end of the
analysis. Federal courts have the authority to review an agency’s actions to ensure that its own
regulations have been followed. Service v. Dulles, 354 U.S. 363 (1957). Thus, even “if there are
no 	statutorily-created 	standards 	that 	can 	allow 	for 	judicial 	review,
an agency's own regulations can provide standards 	that 	supply 	a 	basis 	for 	judicial 	review.”
Oryszak v. Sullivan, 565 F. Supp. 2d 14, 21 (D.C. Cir. 2008). Therefore, “[i]n looking for a
workable standard, the court [may consider] the statutory scheme as a whole, in addition to ‘formal
and informal policy statements and regulations[.]’” Netjets Aviation, Inc. v. U.S. Dep't of Agric.,
No. 2:20-CV-4464, 2021 WL 3603323, at *8 (S.D. Ohio Aug. 13, 2021) (quoting Kondapally v.
U.S. Citizenship & Immigr. Servs., No. CV 20-00920 (BAH), 2020 WL 5061735, at *4 (D.D.C.
Aug. 27, 2020)). See also Hamad v. Sec'y, Dep't of Homeland Sec., No. 3:20-CV-476, 2021 WL
2982765, at *2 (S.D. Ohio July 14, 2021) (quoting Physicians for Soc. Responsibility v. Wheeler,
956 F.3d 634, 643 (D.C. Cir. 2020)) (noting that a judicially manageable standard can exist in
“‘policy statements and regulations.’”). The Court may look to an agency’s regulations and
26 Defendant also couches this argument in terms of sovereign immunity in its Opening Brief. (Doc. No.
34-1 at 14). The “APA provides a broad waiver of sovereign immunity.” Beamon v. Brown, 125 F.3d 965,
967 (6th Cir. 1997). This waiver is “limited by [the] two exceptions” in 5 U.S.C. § 701(a) and 5 U.S.C. §
704. Id. See also Stone v. Comm'r of Internal Revenue, 86 F.4th 1320, 1327 (11th Cir. 2023), cert.
denied, 144 S. Ct. 1119 (2024) (“the parties seeking to rely on the APA . . . must establish that their claim
falls within the APA’s terms.”). Accordingly, the Court analyzes these arguments through the lens of the
APA’s applicability and whether the waiver is limited by 5 U.S.C. § 701(a)(2).
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guidance even where the statute underwriting those regulations is itself discretionary. See, e.g.,
Billeke-Tolosa v. Ashcroft, 385 F.3d 708, 711 (6th Cir. 2004); Barrios Garcia v. United States
Dep’t of Homeland Sec., 25 4th 430, 445-50 (6th Cir. 2022). Thus, ‘“[a]n agency can create a non-
discretionary duty by binding itself through a regulation carrying the force of law.’” Barrios
Garcia, 25 4th at 450 (quoting Elec. Priv. Info. Ctr. v. Internal Revenue Serv., 910 F.3d 1232,
1244 (D.C. Cir. 2018)). When an agency creates such a non-discretionary duty, the court is not
barred from reviewing plaintiff’s claims under § 701(a)(2), because it now has “judicially
manageable standards” by which to review the “discretionary agency action[].” Barrios Garcia,
25 4th at 446-47.
Defendant argues that Plaintiff’s adjudicatory challenges (i.e., Count IV and Count VIII)
are impermissible because the determination of a § 7623(a) award “is committed to agency
discretion by law” and thus not subject to judicial review. (Doc. No. 34-1 at 13). Because Plaintiff
acknowledges that the IRS’s discretion under 26 U.S.C. § 7623(a) is “undeniable” (Doc. No. 40 at
3), the primary question is whether, as Plaintiff alleges, the IRS’s regulations in Treas. Reg. §
301.7623-1 through -4 or the IRS guidance in IRM § 25.2.2.6.4 or IRM Exhibit 25.2.2-1 limit the
IRS’s discretion and provide a “meaningful standard against which to judge the agency’s exercise
of discretion.” (Doc. No. 40 at 5).27 As explained below, the Court concludes that these regulations
and guidance do not limit the IRS’s discretion or provide a “meaningful standard against which to
judge the agency’s exercise of discretion.” (Id.).
27 To the extent that Plaintiff argues that IRM § 25.2.2.8.2.1 provides a meaningful standard for the Court
to review the adjudication of Plaintiff’s Whistleblower Award (Doc. No. 40 at 7-8, 13-14), this need not be
considered as the “Court does not consider any issues not raised in the complaint.” Odom v. Hiland, No.
5:13CV-P29-R, 2013 WL 4045367, at *2 (W.D. Ky. Aug. 8, 2013). Plaintiff does not mention IRM §
25.2.2.8.2.1 anywhere in the Complaint, and this IRM provision makes its first appearance in Plaintiff’s
Response. (Doc. No. 40 at 7). Accordingly, the arguments concerning IRM § 25.2.2.8.2.1 need not be
considered.
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i. 	Treas. Reg. § 301.7623-4 Does Not Apply to Plaintiff’s § 7623(a)
Whistleblower Award.
To determine whether, as Plaintiff alleges, Treas. Reg. § 301.7623-4 provides a judicially
reviewable standard for this Court to apply, the Court must first determine whether the substantive
provisions of Treas. Reg. § 301.7623-4, including “the application of the . . . non-exclusive factors
[listed in Treas. Reg. § 301.7623-4(b)(1)(i)-(viii) to determine whether they] support increasing an
award percentage,” Treas. Reg. § 301.7623-4(b)(1) and “the application of the . . . non-exclusive
factors [listed in Treas. Reg. § 301.7623-4(b)(2)(i)-(viii) to determine whether they] support
decreasing 	an 	award 	percentage,” 	Treas. 	Reg. 	§ 	301.7623-4(b)(2), 	apply 	to 	Plaintiff’s
Whistleblower Award.
Unsurprisingly, “[c]ourts must determine a regulation’s meaning by starting with its text.”
Hamilton v. Comm'r of Soc. Sec., 98 F.4th 800, 805 (6th Cir. 2024) (citing Saginaw Chippewa
Indian Tribe of Mich. v. Blue Cross Blue Shield of Mich., 32 F.4th 548, 557 (6th Cir. 2022)). And
the Court should “interpret the applicable regulations as we would a statute.” Lake Bldg. Prods.,
Inc. v. Sec'y of Lab., 958 F.3d 501, 504 (6th Cir. 2020) (citing Kisor v. Wilkie, 588 U.S. 558, 575
(2019)). Thus, when “particular language” is included in “one section,” of a regulation but omitted
“in another section,” it is generally presumed that the omission was intentional and purposeful.
Salinas v. U.S. R.R. Ret. Bd., 592 U.S. 188, 197 (2021) (quoting Russello v. United States, 464 U.S
16, 23 (2021)) (internal quotation marks omitted). See also City of Cleveland v. Ohio, 508 F.3d
827, 847 (6th Cir. 2007) (applying principle of expressio unius est exclusio alterius). This type of
interpretative presumption is strongest where the “relevant . . . provisions were considered
simultaneously when the language raising the implication was inserted.” Gomez-Perez v. Potter,
553 U.S. 474, 486 (2008) (quoting Lindh v. Murphy, 521 U.S 320, 330 (1997)) (internal quotation
marks omitted).
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Additionally, “[w]e must interpret regulations, no less than other legal texts, ‘in a way that
renders them compatible, not contradictory.’” Edwards v. CSX Transp. Inc., 821 F.3d 758, 762
(6th Cir. 2016) (quoting Maracich v. Spears, 570 U.S. 48, 68 (2013)). Moreover, “[i]t is a
fundamental canon of construction that the words of a text must be read in their context and with
a view to their place in the overall scheme.” United States v. Gillispie, 929 F.3d 788, 790 (6th Cir.
2019) (citing Davis v. Mich. Dep't of Treasury, 489 U.S. 803, 809 (1989)).
Beginning then with the plain text of the regulations, Treas. Reg. § 301.7623-3 provides in
relevant part:
. . . [T]he Whistleblower Office will communicate a preliminary award recommendation
under section 7623(a) and §§ 301.7623-1 through 301.7623-4 to the whistleblower by
sending a preliminary award recommendation letter that states the Whistleblower Office’s
preliminary computation of the amount of the collected proceeds, recommended award
percentage, 	recommended 	award 	amount 	(even 	in 	cases 	when 	the 	application 	of
§301.7623-4 results in a reduction of the recommended award amount to zero), and a list
of the factors that contributed to the recommended award percentage.
Treas. Reg. § 301.7623-3(b)(1) (emphasis added).
The critical language is that which is emphasized above: the cross-references to Treas. Reg.
§ 301.7623-4. Treas. Reg. § 301.7623-3 elsewhere provides another cross-references Treas. Reg.
§ 301.7623-4: “[a]t the conclusion of the process described in paragraph (b)(1) of this section, and
when there is a final determination of tax, as defined in § 301.7623-4(d)(2), the Whistleblower
Office will pay an award under section 7623(a) and §§ 301.7623-1 through 301.7623-4.” Treas.
Reg. § 301.7623-3(b)(2).
As relevant here, Treas. Reg. § 301.7623-4(b) provides a list of positive and negative
factors used to determine the award percentage. Unsurprisingly, the idea is that (i) positive factors
(when implicated in the case of a particular award) support increasing the percentage for that
award, and (ii) negative factors (when implicated in the case of a particular award) support
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decreasing the percentage for that award. According to Plaintiff, this provision provides the Court
a judicially manageable standard by which to review the adjudication of Plaintiff’s Whistleblower
Award.
At first blush, these cross-references from Treas. Reg. § 301.7623-3 would suggest that
Treas. Reg. § 301.7623-4(b)’s list of factors should be applied to the determination of Plaintiff’s
Whistleblower Award, thereby potentially providing a standard by which this Court could review
Plaintiff’s adjudication. 	But the Court cannot accept this suggestion without further analysis,
because the applicability of Treas. Reg. § 301.7623-4 generally—and of Treas. Reg. § 301.7623-
4(b)’s list of factors—is subject to the “Effective/applicability date” subsection of Treas. Reg. §
301.7623-4, which provides, “[t]his rule is effective on August 12, 2014 [and] applies to
information submitted on or after August 12, 2014, and to claims for award under section 7623(b)
that are open as of August 12, 2014.” Treas. Reg. § 301.7623-4(e). Under this subsection, then,
Treas. Reg. § 301.7623-4(b)’s list of factors is applicable to (and, by implication, only to) two
categories of awards. The first category is awards (both 7623(a) awards and § 7623(b) awards)
involving information submitted by the whistleblower on or after August 12, 2024; this does not
encompass Plaintiff’s Whistleblower Award, which involved information submitted no later than
2006.28 The second category is § 7623(b) awards that were open as of August 12, 2014; this does
not encompass Plaintiff’s Whistleblower Award, which is a § 7623(a) award and not a § 7623(b)
award. Treas. Reg. § 301.7623-4(e). In short, under Treas. Reg. § 301.7623-4(e), the substantive
28 As detailed further in a footnote below, although Plaintiff’s Counsel could have argued that “detailing
information concerning Plaintiff’s Form 211 submission . . . and offering to provide the IRS with additional
information regarding the tax noncompliance at issue on March 3, 2016,” (Doc. No. 1 at ¶ 42(n)) brings
Plaintiff’s Whistleblower Award within the ambit of awards with information submitted on or after August
12, 2014, Plaintiff has not made this argument, and the Court declines to consider it sua sponte.
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provisions of Treas. Reg. § 301.7623-4—including Treas. Reg. § 301.7623-4(b)’s list of factors—
simply are inapplicable to Plaintiff’s whistleblower award.
Plaintiff suggests that the Court should ignore Treas. Reg. § 301.7623-4(e)’s provisions in
favor of what Plaintiff describes as a “reading of the regulations [that] would apply the cross-
referenced Treas. Reg. § 301.7623-4(b) to Plaintiff while excluding the portions of Treas. Reg. §
301.7623-4 that are not cross-referenced by Treas. Reg. § 301.7623-3(b).” (Doc. No. 40 at 13).
The Court rejects that suggestion because it flies in the face of the statutory canon of expressio
unius est exclusio alterius, which the Court concludes is applicable here. The canon of expressio
unius est exclusio alterius “has force only when the items expressed are members of an associated
group or series, justifying the inference that items not mentioned were excluded by deliberate
choice, not inadvertence.” City of Cleveland, 508 F.3d at 847 (quoting Barnhart v. Peabody Coal
Co., 537 U.S. 149, 168 (2003)) (internal quotation marks omitted). In other words, (i) the canon
applies when items expressed in a statute are members of an associated group or series; and (ii)
when it applies, the court is justified in inferring that items not mentioned were excluded by
deliberate legislative choice, not inadvertence.
The canon is applicable here, and thus so is the inference that it contemplates. The other
three Treasury Department regulations at issue here each have their own “Effective/applicability”
date section. These “Effective/applicability date” sections each provide that the subsection is
applicable to “sections 7623(a) and 7623(b) that are open as of August 12, 2014.” Treas. Reg. §§
301.7623-1(f), 301.7623-2(f), 301.7623-3(f) (emphasis added). In contrast, and as noted, Treas.
Reg. § 301.7623-4’s “Effective/applicability date” section provides that it is effective and
applicable to § 7623(a) awards only if based on “information submitted on or after August 12,
2014,” and provides that it is effective and applicable to § 7623(b) awards that are open as of
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August 12, 2024 or have information submitted on or after August 12, 2014. Treas. Reg. §
301.7623-4(e).
Thus, the Court must agree with Defendant that “the Department of the Treasury knew how
to draft regulations that applied to section 7623(a) claims still open in 2014. It opted not to do so
[in Treas. Reg. § 301.7623-4].” (Doc. No. 34-1 at 18) (citing 79 Fed. Reg. 47264 (Aug. 12, 2014)
(“[Section] 301.7623-4 was proposed to apply to information submitted on or after the date the
rules are adopted as final regulations, and to claims for award under section 7623(b) that are open
as of that date. Section 301.7623-4 was not proposed to apply to claims for award under section
7623(a) that are open as of that date.”)).
Accordingly, under this canon, the substantive provisions of Treas. Reg. § 301.7623-4 are
plainly meant to apply to Treas. Reg. § 7623(a) awards based on information submitted on or after
August 	12, 	2014 	(and 	no 	other 	§ 	7623(a) 	awards) 	because 	of 	the 	language 	of 	its
“Effective/applicability date” section. Treas. Reg. § 301.7623-4(e). Thus, by adopting Plaintiff’s
suggestion to apply Treas. Reg. § 301.7623-4 to Plaintiff’s § 7623(a) award—filed as it was on
January 23, 2006, with its last possible information provided on February 20, 2006 (Doc. No. 1 at
¶¶ 42(i), 42(l))—the Court would violate this fundamental, and here applicable, canon of statutory
interpretation.29
29 Plaintiff’s counsel could have argued that “detailing information concerning Plaintiff’s Form 211
submission . . . 	and offering to provide the IRS with additional information regarding the tax
noncompliance at issue on March 3, 2016,” (Doc. No. 1 at ¶ 42(n)) brings Plaintiff’s Whistleblower Award
within the ambit of awards with information submitted on or after August 12, 2014 such as to make Treas.
Reg. § 301.7623-4 (and the corresponding list of positive factors permitting for an increased award
percentage) applicable to Plaintiff’s Whistleblower Award. However, Plaintiff neither made this argument
nor refuted Defendant’s argument that Plaintiff “does not allege that he provided the IRS any information
. . . on or after August 12, 2014.” (Doc. No. 34-1 at 10). And the Court declines to consider this argument
sua sponte.
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Plaintiff also argues that “[c]onstruing regulatory text in context also requires giving effect
to all a regulation’s provisions.” (Doc. No. 40 at 9). The Court agrees, and notes that such
construction is necessary “so that no part [of the regulation] will be inoperative or superfluous,
void or insignificant.” General Medicine, P.C. v. Azar, 963 F.3d 516, 521 (6th Cir. 2020) (quoting
Hibbs v. Winn, 542 U.S. 88, 101 (2004)) (internal quotation marks omitted).
However, the Court does not agree that this rule of construction aids Plaintiff here. Plaintiff
argues that Defendant’s reading of the regulation “effectively excises, without rationale and in
their entirety, those important aspects and cross-references of Treas. Reg. § 301.7623-3(b) from
the regulation and nullifies the inclusion by Treas. Reg. § 301.7623(a)-3(f) [sic] of then-pending
claims like Plaintiff’s in the administrative process offered by Treas. Reg. § 301.7623-3(b).” (Doc.
No. 40 at 12). This argument is unpersuasive.
As Defendant explains, consistent with the Court’s observations above:
There are some § 7623(a) claims to which [Treas. Reg. § 301.7623-4]
applies, all of which are based on information submitted on or after August 12,
2014. See 26 U.S.C. § 7623(a); Treas. Reg. § 301.7623-4(e). So, [Plaintiff] can be
correct that [Treas. Reg. § 301.7623-3] incorporates [Treas. Reg. § 301.7623-4] to
some extent, but it is only for § 7623(a) claims to which [Treas. Reg. § 301.7623-
4] applies (which does not include [Plaintiff’s]).
(Doc. No. 44 at 8).
Construing the regulation as Defendant suggests (and as the Court now does) does not
render any portion of the regulation as “inoperative or superfluous, void or insignificant.” General
Medicine, 963 F.3d at 521 (quoting Hibbs, 542 U.S. at 101) (internal quotation marks omitted).
In conclusion, the substantive provisions of Treas. Reg. § 301.7623-4, including those
calling for (in some but not all cases) “the application of the . . . non-exclusive factors [listed in
Treas. Reg. § 301.7623-4(b)(1)(i)-(viii) to determine whether they] support increasing an award
percentage,” Treas. Reg. § 301.7623-4(b)(1), and “the application of the . . . non-exclusive factors
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[listed in Treas. Reg. § 301.7623-4(b)(2)(i)-(viii) to determine whether they] support decreasing
an award percentage,” do not apply to Plaintiff’s Whistleblower Award. Treas. Reg. § 301.7623-
4(b)(1) thus do not provide a judicially manageable standard with which to review the adjudication
and determination of Plaintiff’s Whistleblower Award.
ii. 	Treas. Reg. § 301.7623-1 Through -3 Do Not Provide a Judicially
Manageable Standard.
Both parties agree that Treas. Reg. § 301.7623-1 through -3 apply to Plaintiff’s
Whistleblower Award. (Doc. No. 40 at 9-14; Doc. No. 44 at 6). Thus, the question is whether these
regulations (unlike Treas. Reg. § 301.7623-4(b)) provide meaningful standards to apply in this
case when reviewing the adjudication of Plaintiff’s Whistleblower Award. The Court thus will
examining each of these three regulations in turn.
Treas. Reg. § 301.7623-1 merely provides information regarding “[g]eneral rules” for
submitting a claim for a whistleblower award, such as rules regarding: an individual’s “[e]ligibility
to file [a] claim for award,” how to file a “claim for award,” and “[c]onfidentiality.” Treas. Reg. §
301.7623-1(b), (c)(2), (e). None of these rules provide a standard under which to review a
claimant’s challenge to his or her award determination. Plaintiff’s Complaint relies on Treas. Reg.
§ 301.7623-1(a), which provides in part that the “the Whistleblower Office may pay an award
under section 7623(a), in a suitable amount,” but this does not avail Plaintiff either. (Doc. No. 1 at
¶ 90). First, Treas Reg. § 301.7623-1, even to the extent that it discusses awarding whistleblowers
a “suitable amount,” does not provide “judicially manageable standards,” or otherwise “‘create a
non-discretionary duty by binding [the IRS] through a regulation carrying the force of law’” with
respect to the determination and adjudication of Plaintiff’s Whistleblower Award. Barrios Garcia,
25 4th at 446-47, 450 (quoting Elec. Priv. Info. Ctr., 910 F.3d at 144). “Suitable amount,” is not
a “workable standard,” and gives the Court no indicia by which to assess the sufficiency of an
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award. Second, this provision is couched in terms of what the Whistleblower Office “may” pay,
thus clearly denoting discretion whether to pay any award at all; such a provision thus stands out
as an unlikely source for a standard that cabins the agency’s discretion as to what to pay if it pays.
Singh v. Rosen, 984 F.3d 1142, 1151 (6th Cir. 2021) (quoting Fogerty v. Fantasy, Inc., 510 U.S.
517, 533 (1994)) (“As the Supreme Court has observed, ‘[t]he word ‘may’ clearly connotes
discretion.’”). Thus, the Court cannot rely on Treas. Reg. § 301.7623-1 to review the adjudication
of Plaintiff’s Whistleblower Award.
Turning to Treas. Reg. § 301.7623-2, this subsection fares no better, being comprised
mainly of definitions, which clearly do not provide a standard for this Court to review Plaintiff’s
Whistleblower Award determination or otherwise limit the agency’s discretion with respect to the
determination of Plaintiff’s Whistleblower Award.
Most of the discussion in the parties’ briefing is devoted to Treas. Reg. § 301.7623-3, which
seemingly provides Plaintiff his best avenue for finding a judicially reviewable standard in the
regulations. But on close examination of this regulation, the Court actually can find no such thing,
for two reasons. First, Treas. Reg. § 301.7623-3 does not apply to the determination of claims filed
under 	§ 	7623(a). 	Second, 	the 	regulation 	merely 	imposes 	procedural 	requirements 	for
communicating with award claimants (as opposed to substantive requirements for determining the
award amount).
Plaintiff 	claims 	that 	Treas. 	Reg. 	§ 	301.7623-3 	“provide[s] 	for 	and 	require[s] 	an
individualized, multifactor analysis for claims filed under § 7623(a).” (Doc. No. 40 at 7). This is
incorrect because Treas. Reg. § 301.7623-3 actually does not apply to the analysis (i.e.,
determination) of claims filed under § 7623(a). Treas. Reg. § 301.7623-3(a) provides that the
“Whistleblower Office will pay awards under section 7623(a) and determine and pay awards under
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section 7623(b) pursuant to the rules of the section.” Treas. Reg. § 301.7623-3(a) (emphasis
added). Again, this distinction is important; under Treas. Reg. § 301.7623-3, only § 7623(b)
awards are determined, and awards under § 7623(a) are merely paid (but not determined). In other
words, the only awards that are determined under Treas. Reg. § 301.7623-3 are § 7623(b) awards,
a category that excludes Plaintiff’s Whistleblower Award. To read the regulation otherwise—
including by reading it in a way that conflates § 7623(a) awards with § 7623(b) awards or
determination 	of 	awards 	with 	payment 	of 	awards—would 	render 	part 	of 	the 	regulation
“inoperative or superfluous, void or insignificant” in contravention of settled interpretative
principles. General Medicine, 963 F.3d 516 at 521. And even if Treas. Reg. § 301.7623-3 did apply
to the determination of claims filed under § 7623(a), Plaintiff’s above-quoted claim still would be
incorrect because as discussed below, Treas. Reg. § 301.7623-3 does not require a “multifactor
analysis” for the determination of claims.
Asserting otherwise, Plaintiff suggests that § 301.7623-3(b)(1) “direct[s] the IRS to make
§ 7623(a) awards based on” multiple factors, namely “‘the amount of collected proceeds,
recommended award percentage, recommended award amount (even in cases when the application
of 301.7623-4 results in a reduction of the recommended award amount to zero), and a list of the
factors that contributed to the recommended award percentage.’” (Doc. No. 40 at 7) (emphasis
added) (quoting Treas. Reg. § 301.7623-3(b)(1)). In other words, Plaintiff asserts that the listed
items he has quoted from § 301.7623-3(b)(1) are factors that the IRS must analyze in determining
claims. Again, Plaintiff is mistaken.
In full, Treas. Reg. § 301.7623-3(b)(1) provides:
(1) Preliminary 	award 	recommendation. In 	cases 	in 	which 	the
Whistleblower Office recommends payment of an award under section 7623(a), the
Whistleblower 	Office 	will 	communicate 	a preliminary 	award
recommendation under section 7623(a) and §§ 301.7623-1 through 301.7623-4 to
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the 	whistleblower 	by 	sending 	a preliminary 	award 	recommendation letter
that states the Whistleblower Office's preliminary computation of the amount
of collected proceeds, recommended award percentage, recommended award
amount (even in cases when the application of § 301.7623-4 results in a reduction
of the recommended award amount to zero), and a list of the factors that
contributed 	to 	the 	recommended 	award 	percentage. 	The 	whistleblower
administrative proceeding described in paragraphs (b)(1) and (2) of this section
begins 	on 	the 	date 	the 	Whistleblower 	Office 	sends 	the preliminary 	award
recommendation letter. If the whistleblower believes that the Whistleblower Office
erred in evaluating the information provided, the whistleblower has 30 days from
the date the Whistleblower Office sends the preliminary award recommendation to
submit comments to the Whistleblower Office (this period may be extended at the
sole discretion of the Whistleblower Office). The Whistleblower Office will review
all comments submitted timely by the whistleblower (or the whistleblower's legal
representative, if any) and pay an award, pursuant to paragraph (b)(2) of this
section.
Treas. Reg. § 301.7623-3(b)(1) (emphasis added).
So, what Treas. Reg. § 301.7623-3(b)(1) does is prescribe various procedural steps
concerning the recommendation (and eventual payment) of a § 7623(a) award, including the
manner 	in 	which 	the 	Whistleblower 	Office 	will 	“communicate 	a 	preliminary 	award
recommendation[.]” Treas. Reg. § 301.7623-3(b)(1) (emphasis added). The communication is in
the form of a letter, and the letter is to include certain things. The things to be included in the letter
are the things that Plaintiff quoted from the regulation: “‘the amount of collected proceeds,
recommended award percentage, recommended award amount (even in cases when the application
of 301.7623-4 results in a reduction of the recommended award amount to zero), and a list of the
factors that contributed to the recommended award percentage.’” (Doc. No. 40 at 7). These are
things to be included in an award recommendation letter and, contrary to Plaintiff’s argument here,
not factors to be analyzed in making a determination on a § 7623(a) award.
It is true that Treas. Reg. § 301.7623-3(b)(1) expressly refers to a “list of factors” in relation
to payment of a § 7623(a) award, namely a “list of factors that contributed to the recommended
award percentage.” Treas. Reg. § 301.7623-3(b)(1). 	But the regulation here does not list or
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prescribe factors for making a recommendation as to an award percentage; rather, it merely states
that whatever those factors are, the Whistleblower Office must list them in its “preliminary award
recommendation letter.” Treas. Reg. § 301.7623-3(b)(1).
In short, the requirements under Treas. Reg. § 301.7623-3(b)(1) do not relate to the
determination of the awards under § 7623(a), but instead to the procedures surrounding the
requirements for communicating preliminary recommendations for awards under § 7623(a). And,
relatedly, Treas. Reg. § 301.7623-3(b)(1) specifies no factors for the determination of such awards.
So, this regulation does not contain a substantive standard for determining § 7623(a) awards, but
instead a procedural standard for communicating that award to whistleblowers via an award letter.
The Court’s interpretation of this distinction is buttressed by the language in Treas. Reg. §
301.7623-3(a) which, as discussed above, expressly provides that the regulatory section is to be
used to “pay” awards under § 7623(a), as opposed to determining them.
With respect to the other provisions of Treas. Reg. § 301.7623-3(b), Treas. Reg. §
301.7623-3(b)(2) simply describes the procedure surrounding the award “[d]ecision letter,”
including that the “Whistleblower Office will pay an award under section 7623(a) and §§
301.7623-1 through 301.7623-4,” and that the Whistleblower Office will further “communicate
the amount of the award to the whistleblower in a decision letter.” These provisions, again, provide
no standard by which to judge the adjudication at issue here, either referencing other sections of
the regulation which the Court has concluded either do not apply to Plaintiff or do not provide a
workable standard, referencing the statute itself which provides no standard, or merely referring
to sending a decision letter (the procedural validity of which is not at issue).
Treas. Reg. § 301.7623-3(b)(3) also provides no standard for the Court to use and merely
focuses on the procedure concerning rejections and denials of awards under § 7623(a).
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Thus, although Treas. Reg. § 301.7623-3 may provide “judicially manageable standards,”
or otherwise “‘create a non-discretionary duty by binding [the IRS] through a regulation carrying
the force of law,’” Barrios Garcia, 25 4th at 446-47, 450 (quoting Elec. Priv. Info. Ctr., 910 F.3d
at 144), with respect to the contents of the preliminary award recommendation letter and other
procedures underlying the communication of the whistleblower award under § 7623(a), it creates
no such standard and no such duty with respect to the determination of the award itself. Plaintiff
is challenging not the procedure surrounding his award letter or its communication, but rather the
procedure for (and the applicability of substantive rules applied in) determining his Whistleblower
Award. Thus, Treas. Reg. § 301.7623-3, without more, also does not provide a workable standard
to permit judicial review.30
Accordingly, Treas. Reg. § 301.7623-1 through -3 do not provide “the Court with . . .
standards” against which to evaluate the IRS’s adjudication of Plaintiff’s Whistleblower Award.
Netjets, 2021 WL 3603323, at *8, and thus the Court has no means via Treas. Reg. § 301.7623-1
through -3 “to review,” the IRS’s “discretionary agency action[]” in determining Plaintiff’s
Whistleblower Award. Barrios Garcia, 25 4th at 446.
iii. 	IRM § 25.2.2.6.4 and IRM Exhibit 25.2.2-1 Do Not Provide Meaningful
Standards for the Court to Apply.
To the extent that Plaintiff argues that IRM § 25.2.2.6.4 and IRM Exhibit 25.2.2-1 provide
a meaningful standard for this Court to apply, this argument is predicated on the assumption that
the “IRS cannot satisfy the terms of Treas. Reg. § 301.7623-3(b) [(or the other applicable
regulations in Treas. Reg. § 301.7623-1 through -2)] without conducting . . . an individualized
30 It is important to note here what exactly Plaintiff is challenging with respect to his Whistleblower Award.
None of Plaintiff’s counts are predicated on violations of the procedure in which the Whistleblower Award
was communicated to Plaintiff. Rather, Plaintiff is challenging the substantive adjudication of the award
amount itself and the fact that the Cap was applied at all.
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analysis of factors, whether it draws those factors from Treas. Reg. § 301.7623-4(b) or from [the
IRM].” (Doc. No. 40 at 14).31 Yet, as indicated by the discussion above, this is an erroneous
reading for two reasons. First, as discussed above, Treas. Reg. § 301.7623-4(b) does not apply to
Plaintiff’s Whistleblower Award at all. Second, neither Treas. Reg. § 301.7623-3 nor Treas. Reg.
§ 301.7623-1 through -2 mandate the Whistleblower Office apply factors when determining a
§7623(a) award, instead providing certain procedural requirements that the IRS must follow when
communicating an award letter and when it “pay[s]” an award under 26 U.S.C. § 7623(a). As
detailed 	above, 	whether 	the 	IRS 	followed 	its 	procedure 	in 	communicating 	Plaintiff’s
Whistleblower Award is not at issue here, only the determination and adjudication of the award
itself is.
Accordingly, any sort of reliance on the IRM is unavailing for Plaintiff in a search for a
judicially manageable standard.
b. 	Conclusion
Because the Court concludes that neither 26 U.S.C. § 7623(a), nor Treas. Reg. § 301.7623-
1 through -4, nor indeed IRM § 25.2.2.6.4 or IRM Exhibit 25.2.2-1 provide meaningful standards
or law to apply in this case, the IRS’s decision to award Plaintiff a § 7623(a) award is “committed
to agency discretion by law” and therefore not subject to judicial review. 5 U.S.C. § 701(a)(2).
Accordingly, Plaintiff’s adjudicatory challenges to his Whistleblower Award contained in
Count IV and Count VIII are unreviewable under 5 U.S.C. § 701(a)(2) and will be dismissed
pursuant to Rule 12(b)(6).
31 This argument seems to be anticipated in Plaintiff’s Complaint, where Plaintiff argues that “[t]he IRM
$10 Million Cap thus effectively removes and replaces the analysis anticipated by” the applicable Treasury
regulations. (Doc. No. 1 at ¶ 90).
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2. 	Rulemaking Challenges
This leaves Plaintiff’s rulemaking challenges (made in Count I, Count II, Count III, Count
V, Count VI, and Count VII) to the Cap and to the Policy Change pending before the Court. A
brief note is therefore appropriate on the remedies that Plaintiff seeks. As discussed above, Plaintiff
seeks numerous forms of relief but, as to some forms, does not make them in connection with
particular counts. As further discussed above, the Court treats forms of relief targeted at the validity
of the 2018 IRM Award Policy Change and the IRM $10 Million Fixed Maximum Dollar Cap as
being requested under the rulemaking challenges.
In short, the Court understands that with respect to the rulemaking challenges to the Cap
and to the Policy Change, Plaintiff requests that this Court “[r]emand the 2018 IRM Award Policy
Change described in IRM § 25.2.2.6.3 and IRM Exhibit 25.2.2-1 to the IRS for reconsideration in
compliance with the APA with consideration of treating all filers similarly with respect to the
application of IRM $10 Million Fixed Maximum Dollar Cap,”32 “[e]nter a judgement declaring
that both the promulgation and application of the IRM $10 Million Fixed Maximum Dollar Cap
specifically outlined in IRM Exhibit 25.2.2-1, Policy Statement 4-27 and the 2018 IRM Award
Policy Change described in IRM § 25.2.2.6.3, are arbitrary, capricious, otherwise not in
accordance with law, or otherwise in excess of statutory jurisdiction, authority, or limitation, or
short of statutory right, within the meaning of the Administrative Procedure Act,”33 or “[i]ssue an
32 The Court understands Plaintiff here to request that the Court remand the Policy Change to the IRS and,
in so doing, order the IRS to reconsider the rule for future applicants. The Court interprets this to be a
request for prospective relief akin to an injunction.
33 To the extent that there is doubt here, the Court understands this to be a request for a prospective
declaration that the IRS guidance is unlawful. See e.g., Bowles v. Whitmer, 120 F.4th 1304, 1310-11 (6th
Cir. 2024) (“While a past injury might create standing to seek damages, it generally does not create standing
to seek an injunction or declaratory judgment. These forward-looking preventative remedies will do
nothing to redress an already-occurred injury.” (citations omitted)).
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order vacating and setting aside IRM $10 Million Fixed Maximum Dollar Cap specifically outlined
in IRM Exhibit 25.2.2-1, Policy Statement 4-27 and the 2018 IRM Award Policy Change described
in IRM § 25.2.2.6.3, pursuant to the Administrative Procedure Act.”34 (Doc. No. 1 at 43-44). In
effect, all of this is prospective relief seeking to challenge the guidance writ large as to future
claimants, and not retrospective relief challenging the application of the Cap and the Policy Change
to Plaintiff’s adjudication, which would be relief properly sought under Counts IV and VIII.35
34 Whether vacating an “agency rule is a prospective or retrospective remedy is an issue that is hotly
debated.” Butler Amusements, Inc. v. United States Dep't of Lab., No. CV 24-1042, 2025 WL 2457687, at
*11 (D.D.C. Aug. 26, 2025). Compare John Harrison, Vacatur of Rules Under the Administrative
Procedure Act, 40 Yale J. on Reg. 119, 129 (2023) (“Vacatur is a prospective remedy, which eliminates the
binding effect of regulations for the future.”) with Daniel H. Conrad, Filling the Gap: The Retroactive Effect
of Vacating Agency Regulations, 29 Pace Univ. L. Rev. 1, 1 (2011) (“When a court vacates an agency
regulation, there is a serious question as to whether or not the vacation should apply retroactively.”). To the
extent that there is doubt here, the Court understands this to be a request for a prospective vacatur of the
rule as to future claimants. To the extent that Plaintiff intended to request relief retroactively as to apply to
the adjudication of Plaintiff’s Whistleblower Award, the Court notes that such a request would be an
impermissible challenge to the underlying adjudication which the Court has concluded is unreviewable
under the APA.
35 The Court notes that to the extent that Plaintiff intends or intended to use the rulemaking challenges to
the IRS guidance to seek relief that would ultimately challenge the underlying adjudication, (e.g., relief that
challenges the rules as applied to Plaintiff), this would be (in light of the Court’s conclusion that the
adjudication is unreviewable) an impermissible workaround of the prohibition in 5 U.S.C. § 701(a)(2) of
judicial review of decisions committed by law to agency discretion.
The Court also notes that in light of Plaintiff’s Response, it is now unclear exactly what forms of requested
relief are still pending before the Court. In his Response, Plaintiff seems to cabin his request for relief, and
clarifies that “[t]o be clear, Plaintiff is asking that this Court permanently enjoin the application of the IRM
$10 Million Fixed Maximum Dollar Cap and the 2018 IRM Award Policy Change as they relate to
Plaintiff’s Final Award Determination and remand this matter back to the IRS to make a redetermination
of Plaintiff’s Whistleblower Award in a manner that takes this injunction into consideration and complies
with governing Treasury regulations. This relief would, of course, require prospective work to be done by
the IRS. Alternatively, Plaintiff has asked this Court to issue an order simply finding that Plaintiff is entitled
to the 15 percent award that the IRS approved before mechanically applying the IRM $10 Million Fixed
Maximum Dollar Cap and the 2018 IRM Award Policy Change, as set forth in its Final Award
Determination.” (Doc. No. 40 at 25). Yet, the form of relief Plaintiff refers to here seems better sought only
under Plaintiff’s barred adjudicatory counts (Counts IV and VIII), which is how the Court construes the
Complaint as discussed above.
In any event, for the sake of addressing Plaintiff’s Complaint in a light most favorable to it, and for the
sake of addressing each count and each claim for relief put forward by Plaintiff, the Court will address the
prayers for relief as written in the Complaint.
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As detailed below, this renders Plaintiff’s rulemaking counts fatally deficient due to lack
of Article III standing.
a. 	Standing Generally
“Standing ‘ensure[s] that federal courts do not exceed their authority’ and ‘limits the
category of litigants empowered to maintain a lawsuit in federal court to seek redress for a legal
wrong.’” Tenn. Gen. Assemb. v. U.S. Dep’t of State, 931 F.3d 499, 507 (6th Cir. 2019) (quoting
Spokeo, Inc. v. Robins, 578 U.S. 330, 338 (2016)). “[A]s the party invoking federal jurisdiction,”
a plaintiff has the burden of establishing standing by alleging facts demonstrating that he: “(1)
suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant,
and (3) that is likely to be redressed by a favorable judicial decision.” Spokeo, 578 U.S. at 338
(citations omitted). “Standing is to be determined as of the time the complaint is filed.” Lynch v.
Leis, 382 F.3d 642, 647 (6th Cir. 2004) (citation omitted) (internal quotation marks omitted). A
plaintiff “must satisfy” this “three-part test for each injury that they allege, for each defendant that
they sue, and for each remedy that they seek.” Bowles v. Whitmer, 120 F.4th 1304, 1310 (6th Cir.
2024) (emphasis added) (citing Fox v. Saginaw Cnty., 67 F.4th 284, 293 (6th Cir. 2023); Davis v.
Colerain Township, 51 F.4th 164, 171 (6th Cir. 2022)). Importantly, a plaintiff “cannot rely on
general or conclusory allegations in support of its standing but instead must assert a plausible claim
for why it has standing.” Glennborough Homeowners Ass’n v. United States Postal Serv., 21 F.4th
410, 414 (6th Cir. 2021).
“[W]hen a plaintiff seeks prospective relief such as an injunction,” as does Plaintiff here,
“the plaintiff must establish a sufficient likelihood of future injury.” FDA v. Alliance for
Hippocratic Med., 602 U.S. 367, 382 (2024). See also Tessanne v. Children’s Hosp. Med. Ctr. of
Akron, 	No. 	23-3480, 	2024 	WL 	1435306 	at 	*2 	(6th 	Cir. 	Apr. 	3, 	2024)
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(“To seek such prospective relief, a plaintiff must be facing an imminent risk of future harm.”).
“A plaintiff’s standing to seek [prospective] relief depends on the likelihood of future harm.”
Hange v. City of Mansfield, Ohio, 257 F. App’x 887, 891 (6th Cir. 2007) (citing L.A. v. Lyons, 461
U.S. 95 at 105 (1983)) (discussing standing in the context of declaratory and injunctive relief).
That is to say, a plaintiff must allege facts showing that he faces a threat of injury that is “real and
immediate, not conjectural or hypothetical.” Lyons, 461 at 101-02 (internal quotation marks
omitted). Where the “threat of repeated injury is speculative or tenuous, there is no standing to
seek” prospective relief. Grendell v. Ohio Sup. Ct., 252 F.3d 828, 833 (6th Cir. 2001) (discussing
prospective relief in the form of an injunction and declaration). Thus, “[a]bsent a sufficient
likelihood that [plaintiff] will again be wronged in a similar way,” a plaintiff is not entitled to
prospective relief. Lyons, 461 U.S. at 111.
Importantly, although previous injury might be “evidence bearing on whether there is a
real and immediate threat of repeated injury,” “[p]ast exposure to illegal conduct does not in itself
show a present case or controversy regarding [prospective] relief . . . if unaccompanied by any
continuing, present adverse effects.” O’Shea v. Littleton, 414 U.S. 488, 495-96 (1974). Thus, past
injury alone “is not an adequate injury in fact to confer standing for [prospective] relief.” Grendell,
252 F.3d at 832. And plaintiffs lack standing to seek prospective “relief for events that occurred
wholly in the past.” Tessanne, 2024 WL 1435306, at *2.
It is important to note that federal courts must decide jurisdictional issues before
considering merits issues. See In re: 2016 Primary Election, 836 F.3d 584, 587 (6th Cir. 2016);
Amacher v. Tennessee, No. 3:21-CV-00638, 2022 WL 141607, at *2 (M.D. Tenn. Jan. 14, 2022)
(same). A challenge to a plaintiff's standing under Article III of the Constitution is a challenge to
subject-matter jurisdiction; Article III “[s]tanding is a jurisdictional requirement,” and “[i]f no
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plaintiff has standing, then the court lacks subject-matter jurisdiction.” Tenn. Gen. Assemb., 931
F.3d at 507. Accordingly, the Court first addresses whether Plaintiff has standing to pursue his
rulemaking challenges to the Cap and to the Policy Change (and the accompanying prospective
relief).
Because the Court ultimately concludes that Plaintiff lacks standing as to his rulemaking
claims and their accompanying relief, the Court does not reach the other arguments raised by the
parties’ briefing.
b. 	Plaintiff Lacks Standing to Bring Rulemaking Challenges to the IRM $10 Million
Fixed Maximum Dollar Cap and 2018 Award Policy Change.36
Plaintiff lacks standing to bring rulemaking challenges to the IRM $10 Million Fixed
Maximum Dollar Cap and 2018 Award Policy Change because he has not alleged anywhere in his
Complaint that these policies will be applied to him again. The relief which Plaintiff seeks with
respect to his rulemaking challenges to the Cap and to the Policy Change is plainly the sort of
prospective relief that “depends on the likelihood of future harm” to Plaintiff. Hange, 257 F. App’x
at 891. Plaintiff has provided nowhere in his Complaint that he is at risk of future harm from these
policies or pled that there is “sufficient likelihood that he will again be wronged in a similar way.”
Lyons, 461 U.S. at 111. True, Plaintiff pled a past injury, i.e., the past application of the Cap and
the Policy Change to his adjudication.37 Yet, this past injury alone is not enough to “confer
standing” to seek prospective relief. Grendell, 252 F.3d at 832. Beyond this past injury, Plaintiff
36 Defendant also argues that Plaintiff lacks standing to bring Counts V, VI, and VII for an additional reason,
namely that in those particular counts, Plaintiff challenges merely the retention of the $10 Million Fixed
Maximum Dollar Cap. (Doc. No. 44 at 11 n.13). This argument has initial appeal, but the Court declines to
address it because the Court concludes herein that Plaintiff entirely lacks standing to bring the rulemaking
claims challenging the Cap and the Policy Change.
37 Indeed, Defendant does not contest Plaintiff’s “standing for his as-applied, adjudicatory challenges.”
(Doc. No. 44 at 13).
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has not alleged that he is “facing imminent” reapplication of the Cap. Tessanne, 2024 WL
1435306, at *2. Nor indeed has Plaintiff even pled a “speculative or tenuous” threat of “future
injury.” Grendell, 252 F.3d at 833. To make out any sort of threat of future injury, the Court would
need to concoct out of whole cloth new allegations in the Complaint to allege that Plaintiff intends
to submit another IRS whistleblower award and that such a whistleblower award would somehow
be subject to the Cap and Policy Change. Even if the Court could concoct such allegations (which
actually it cannot), those allegations would do Plaintiff no good because they would present “a
chain of events . . . simply too attenuated to establish injury in fact, and to confer the required
standing.” Id.
The application of the Cap to Plaintiff’s Whistleblower Award was completed no later than
when Plaintiff was sent his Second Final Award Determination on September 27, 2023. (Doc. No.
1 at ¶ 42(t)). Indeed, the application of the Cap to Plaintiff, and the injury derived from that
application, occurred “before the court’s intervention was sought,” and are events “that occurred
wholly in the past.” Tessanne, 2024 WL 1435306 at *2. Thus, if the Court were to grant Plaintiff’s
requested prospective relief, it would be granting such relief “for events that occurred wholly in
the past,” which the Sixth Circuit has held as impermissible. Id.
Accordingly, Plaintiff lacks standing to bring his rulemaking challenges and seek the
prospective relief requested thereto. Because Plaintiff lacks standing to bring his rulemaking
challenges in Count I, Count II, Count III, Count V, Count VI, and Count VII, these counts will
be dismissed pursuant to Rule 12(b)(1), and the other arguments in the parties’ briefing on these
counts will not be addressed.
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CONCLUSION
For the various reasons discussed above, each of Plaintiff’s claims is subject to dismissal.
Therefore, the Motion (Doc. No. 34) will be GRANTED in its entirety.
An appropriate accompanying order will be entered.
IT IS SO ORDERED.
___________________________________
ELI RICHARDSON
UNITED STATES DISTRICT JUDGE
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