Dennis P. DESTEFANO, Plaintiff, v. The UNITED STATES, Defendant., United States Court of Federal Claims., 52 Fed.Cl. 291, No. 01-470T., March 22, 2002
Dennis P. DESTEFANO, Plaintiff, v. The UNITED STATES, Defendant.
United States Court of Federal Claims.
52 Fed.Cl. 291
March 22, 2002.
Lawrence M. Lebowsky, Los Angeles, CA, for plaintiff.
Charles J. Crueger, Washington, DC, with whom was Assistant Attorney General Eileen J. O'Connor, for defendant.
This case is before the court on defen╜dant's motion to dismiss pursuant to RCFC 12(b)(1) for lack of subject matter jurisdic╜tion. 26 U.S.C. ("I.R.C.") ╖ 7623 (1994 & Supp. V 1999), confers the Secretary of the Treasury with discretion to determine eligi╜bility for reward for detecting and bringing to trial and punishment persons guilty of violating the internal revenue laws. The is╜sue to be decided is whether plaintiff, who claims that he was not a police officer at the time, is entitled to judicial review of a deci╜sion finding him ineligible for a reward as a law enforcement officer when the applicable regulation disqualifies officers and employees of the Department of the Treasury from receiving rewards. Argument is deemed un╜necessary.
The facts are drawn from the complaint. On or about May 1993, Dennis P. Destefano ("plaintiff') gave the Internal Revenue Ser╜vice, San Jose, California Office (the "IRS") information resulting in successful criminal prosecutions and the recovery of tax, penal╜ties, and interest. On or about April 1999, plaintiff submitted a claim on IRS Form 211 with the Internal Revenue Service District Director for the Western Region (the "Dis╜trict Director") for a reward based on the amounts collected by the IRS, as authorized by I.R.C. ╖ 7623. By letter of August 12, 1999, the District Director denied plaintiffs claim.
On or about April 2001, a representative of the IRS informed plaintiff that his claim was denied because he was a law enforcement officer. 1 On or about May 2001, plaintiff submitted a letter for reconsideration of the District Director's denial of his claim. Plain╜tiff received no response to his request.
1 Plaintiff was not a law enforcement officer when he supplied information to the IRS.
Plaintiff seeks damages to be determined at trial; costs for suit, including attorneys' fees; and other relief as the court deems proper.
Under the Tucker Act, 28 U.S.C. 1491(a)(1) (1994 & Supp. V 1999), the Court of Federal Claims is authorized to
render judgment upon any claim against the United States founded either upon the Constitution, or any Act of Congress or any regulation of an executive department, or upon any express or implied contract with the United States, or for liquidated or unliquidated damages in cases not sound╜ing in tort.
This jurisdiction extends only to claims for money damages and must be strictly con╜strued. United States v. Testan, 424 U.S. 392, 397-98, 96 S.Ct. 948, 47 L.Ed.2d 114 (1976). Moreover, while conferring jurisdic╜tion, the Tucker Act does not create a sub╜stantive right enforceable against the United States for monetary damages. United States v. Mitchell, 445 U.S. 535, 538, 100 S.Ct. 1349, 63 L.Ed.2d 607 (1980); Testan, 424 U.S. at 398, 96 S.Ct. 948. "Instead, to invoke juris╜diction under the Tucker Act, a plaintiff must identify a contractual relationship, constitu╜tional provision, statute, or regulation that provides a substantive right to money damages." Khan v. United States, 201 F.3d 1375, 1377 (Fed.Cir.2000).
I.R.C.╖ 7623 provides:
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 oth╜erwise provided by law. Any amount pay╜able 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.
I.R.C. ╖ 7623 is a discretionary statute em╜powering the cognizant District Director to determine whether a reward is paid and the amount of any reward. Krug v. United States, 168 F.3d 1307, 1310 (Fed.Cir.1999); Saracena v. United States, 206 Ct.Cl. 90, 95, 508 F.2d 1333, 1336 (1975); see also Lager╜meier v. United States, 214 Ct.Cl. 758, 760 (1977); Diamond v. United States, 213 Ct.Cl. 766, 767 (1977).
26 C.F.R. ╖ 301.7623-1(a) (2001) pro╜vides, in pertinent part:
In General In cases where rewards are not otherwise provided for by law, a dis╜trict or service center director may approve a reward, in a suitable amount, for information that leads to the detection of underpayments of tax, or the detection and bringing to trial and punishment of per╜sons guilty of violating the internal reve╜nue laws or conniving at the same.
I.R.C. ╖ 7623 and 26 C.F.R. ╖ 301.7623-1 do not mandate monetary rewards and conse╜quently do not create a substantive right to money damages, so plaintiff cannot premise jurisdiction on either the statute or regula╜tion. Moreover, "[t]he United States cannot be contractually bound merely by invoking the cited statute and regulation." Merrick v. United States, 846 F.2d 725, 726 (Fed.Cir. 1988) (citing Saracena, 206 Ct.Cl. at 96, 508 F.2d at 1336). 2 The applicable statute and regulation neither create contractual obli╜gations upon the Government nor do they empower judicial review. The statute and regulation provide that the IRS may pay a reward. The word "may" does not require a payment of a reward; rather, it gives discre╜tion to the District Director to determine whether payment of a reward is appropriate. Krug, 168 F.3d at 1309; Merrick, 846 F.2d at 726 (explaining that these provisions do not contractually bind the Government). Thus, the District Director's decision to deny plain╜tiff's claim, even if unreasonable, is not re╜viewable by the Court of Federal Claims because plaintiff has not shown that either the statute or the regulation crosses the threshold from a discretionary determination to a mandate of payment. Confidential In╜formant v. United States, 46 Fed.Cl. 1, 6 (2000) (holding that I.R.C. ╖ 7623 is discre╜tionary statute and does not mandate pay╜ment of money within meaning of Tucker Act).
2 In Merrick the Federal Circuit held that the subject statute and regulation amounted to "an indefinite reward offer that an informant may respond to by his conduct." 846 F.2d at 726. The court, however, did not hold that the statute and regulation, alone, contractually bound the Government. The United States becomes con╜tractually bound once it agrees that a party is eligible to receive payment in connection with a successful prosecution of internal revenue laws violators. Merrick, 846 F.2d at 726; see also Krug, 168 F.3d at 1309-10. But see McGrath v. United States, 207 Ct.Cl. 978, 979 (1975) (holding that jurisdiction is lacking because action seeks review under the Administrative Procedure Act).
In McGrath v. United States, 207 Ct.Cl. 978 (1975), plaintiff claimed a reward under LR.C. ╖ 7623 and 26 C.F.R. ╖ 301.7623-1, predicating jurisdiction on the Administrative Procedure Act, 5 U.S.C. ╖ 701-06 (2000) (the "APA"), 207 Ct.Cl. at 979. The APA, howev╜er, excludes judicial review under ╖ 701(a)(2) where "agency action is committed to agency discretion by law." While pointing out that the APA is not a jurisdictional statute, the Court of Claims dismissed the action as non╜reviewable under APA standards. Although this court does not reach the issue, the Fed╜eral Circuit noted in Krug that "it is an open question whether an agency's denial of a discretionary award is reviewable at all." 168 F.3d at 1310 (citing APA). It would be unfortunate, indeed, if the APA's standard of review became confused with examination of the statutory, regulatory, and constitutional provisions that can serve to provide jurisdic╜tion for other claims.
Although plaintiff expressly disavows bringing a claim on a contract theory, he cites cases involving contractual claims. Yet, plaintiff has not pleaded that a contract ex╜ists between the Government and himself. I.R.C. ╖ 7623 does not provide a basis for jurisdiction. The regulation does not create an implied contract, nor does it require the District Director to enter into a contract. Assuming, arguendo, that jurisdiction were present and, further, that a contract had been formed between the Government and plaintiff and that a dispute arose as to the amount of a reward, the court could not review the District Director's determination as to its amount.
Accordingly, based on the foregoing, de╜fendant's motion to dismiss is granted, and the Clerk of the Court shall dismiss the amended complaint without prejudice for lack of subject matter jurisdiction.
IT IS SO ORDERED.