Pulcine v. Commissioner (T.C. Memo. 2020-29)

On March 2, 2020, the Tax Court issued a Memorandum Opinion in the case of Pulcine v. Commissioner (T.C. Memo. 2020-29). The primary issue presented in Pulcine was whether a whistleblower, whose report initiated an audit of the alleged bad actor, which ultimately resulted in the “bad actor” receiving a refund on his return, demonstrated that the IRS’s Whistleblower Office (WBO) abused its discretion in not awarding the whistleblower for his information.

Overview and Holding

The petitioner, one Mr. Charles Stuart Pulcine, believed that he had information regarding a corporate taxpayer’s failure to file its income tax returns. The claim was forwarded to Exam, which examined the corporate taxpayer’s delinquent returns (having been filed in the interim) and concluded that the corporate taxpayer was in compliance with its reporting requirements. Not to be dissuaded, Mr. Pulcine provided additional details regarding the corporate taxpayer’s mischaracterization of $4m expenses as ordinary rather than capital. Exam once again did its thing, and not only determined that the expenses were properly deducted, but that the corporate taxpayer was due a refund of $10,000.

Based upon the fact that the whistleblower’s claim had cost the government valuable time, resources, and had, in point of fact, netted a loss of $10,000 by way of a refund check from Uncle Sam to the alleged ne’er-do-well corporate taxpayer, the WBO sent Mr. Pulcine a preliminary denial letter in November 2015. Having received no comments (witty, banal, or otherwise), the IRS issued a final determination letter denying the whistleblower’s claim.

For reasons utterly unclear in the Tax Court’s opinion, Mr. Pulcine filed a pro se petition with the Tax Court, soon thereafter sending the Tax Court a letter, which the Tax Court (out of the goodness of its heart) “recharacterized as a motion for summary judgment.” Not to be outdone, the IRS filed its own motion for summary judgment.

The two filings were different in a few fundamental respects. First, the IRS’s motion was an actual motion. Second, the IRS’s motion was not written in burnt sienna crayon on a cocktail napkin for a strip club by the airport. Third, and most importantly, the IRS’s motion had actual merit. The Tax Court gave the petitioner 8 good pages (that it’s not getting back) chock-a-block full of reasons why the petitioner needs to go home and think long and hard about what he did.  In keeping with this lesson, the Tax Court granted the IRS’s motion and dispensed with this farce once and for all.

And that’s all I have to say about that.

Original opinion: (T.C. Memo. 2020-29) Pulcine v. Commissioner

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