MCCRORY v. USA

Filing 13

REPORTED OPINION DISMISSING CASE: granting 10 Defendant's Motion to Dismiss - Rule 12(b)(1). The Clerk is directed to enter judgment. Signed by Judge David A. Tapp. (rcm) Service on parties made.

In the United States Court of Federal Claims
No. 24-1221
Filed: November 26, 2024

SUZANNE JEAN MCCRORY,
Plaintiff,
v.
THE UNITED STATES,
Defendant.
Suzanne Jean McCrory, Mamaroneck, NY, Pro se.
Tanner Stromsnes, Trial Attorney, with David A. Hubbert, Deputy Assistant Attorney General,
and David I. Pincus, Chief, Court of Federal Claims Section, and G. Robson Stewart, Assistant
Chief, Court of Federal Claims Section, U.S. Department of Justice, Washington, D.C., for
Defendant.
MEMORANDUM OPINION AND ORDER
TAPP, Judge.
Pro se Plaintiff, Suzanne Jean McCrory (“Ms. McCrory”), asks this Court for help
recovering from the Whistleblower Office (“WBO”) of the Internal Revenue Service (“IRS”).
(Compl., ECF No. 1). Ms. McCrory argues that the IRS incorrectly interpreted and applied
Internal Revenue Code § 7623(b)(2) and its corresponding regulations, 26 C.F.R. 301.7623-4, to
her whistleblower claim by awarding her only one percent of collected proceeds instead of the
fifteen percent minimum. (Id. at 1). The United States moved to dismiss the claim for lack of
subject-matter jurisdiction under RCFC 12(b)(1), or alternatively for failure to state a claim
under RCFC 12(b)(6). (Def.’s Mot. at 4–8, ECF No. 10). The Court agrees with the United States
and hereby GRANTS its Motion to Dismiss for lack of subject-matter jurisdiction pursuant to
Rule 12(b)(1).
Ms. McCrory is a sophisticated pro se plaintiff and a frequent patron of the WBO. She
estimates to have submitted more than 600 claims since 2014. (Compl. at ¶ 34). On August 16,
2018, Ms. McCrory submitted a batch of seven (7) claims, six (6) of which were Financial
Institution Regulatory Authority (“FINRA”) arbitral awards and one (1) was a non-FINRA
settlement. (Id. at ¶ 39). At issue is one of the six FINRA awards, which the WBO adjudicated,
resulting in a recovery of $179,672.20 for the Government. (Id. at ¶ 43). In its Preliminary
Award Recommendation Letter (“PARL”), the WBO awarded Ms. McCrory one percent of the

recovered amount under § 7623(a), a total of $1,796.72. (Id.). 1 Ms. McCrory declined the PARL
and petitioned the WBO for review. (Id. at ¶¶ 44–51). The WBO denied her petition. (Id. at ¶
52). Ms. McCrory then filed a complaint in the United States Tax Court. (Id. at ¶ 55; see
McCrory v. Comm’r. of Internal Revenue, T.C.M. (RIA) 2023-098 (Tax 2023) (hereinafter
“McCrory (2023)”)). There, the Commissioner moved to dismiss, arguing that the Tax Court
lacked jurisdiction because the disputed award did not meet the $2,000,000 statutory threshold of
§ 7623(b)(5)(B). McCrory v. Comm’r. of Internal Revenue, T.C.M. (RIA) 2024-061 (Tax 2024)
(hereinafter McCrory (2024)). The Tax Court rejected the Commissioner’s argument, stating that
the proceeds-in-dispute requirement “is not jurisdictional, but must be raised as an affirmative
defense.” McCrory (2023) at 3. The Commissioner then moved for summary judgment on the
same grounds. McCrory (2024) at 1. This time, the Tax Court granted the Commissioner’s
motion, holding “that the proceeds in dispute did not meet the threshold under section
7623(b)(5)(B) and the Commissioner is entitled to judgment as a matter of law.” Id. Ms.
McCrory then filed suit at the Court of Federal Claims.
The United States now moves to dismiss, arguing the Court lacks jurisdiction over Ms.
McCrory’s claims. (See generally Def.’s Mot.). The burden of establishing subject-matter
jurisdiction rests with the plaintiff, who must do so by a preponderance of the evidence. Lujan v.
Defenders of Wildlife, 504 U.S. 555, 561 (1992); Reynolds v. Army & Air Force Exch. Serv., 846
F.2d 746, 748 (Fed. Cir. 1988). When considering a motion to dismiss for lack of subject-matter
jurisdiction, the court accepts as true all uncontroverted factual allegations made by the nonmovant and draws all inferences in the light most favorable to that party. Estes Exp. Lines v.
United States, 739 F.3d 689, 692 (Fed. Cir. 2014). Pursuant to RCFC 12(b)(1) and 12(h)(3), the
Court must dismiss claims that do not fall within its subject-matter jurisdiction.
This Court’s jurisdiction is generally delimited by the Tucker Act, 28 U.S.C. §1491. The
Tucker Act grants this Court jurisdiction over claims: (1) founded on an express or implied
contract with the United States; (2) seeking a refund for a payment made to the government; and
(3) arising from federal constitutional, statutory, or regulatory law mandating payment of money
damages by the United States. 28 U.S.C. § 1491(a)(1). However, the Tucker Act “does not create
a substantive cause of action; in order to come within the jurisdictional reach and the waiver of
the Tucker Act, a plaintiff must identify a separate source of substantive law that creates the right
to money damages.” Fisher v. United States, 402 F.3d 1167, 1172 (Fed. Cir. 2005) (citations
omitted). A money-mandating claim exists “if the statute, regulation, or constitutional provision
that is the basis for the complaint ‘can fairly be interpreted as mandating compensation by the
Federal Government for the damage sustained.’” Jan’s Helicopter Serv., Inc. v. F.A.A., 525 F.3d
1299, 1307 (Fed. Cir. 2008) (citing United States v. Mitchell, 463 U.S. 206, 217 (1983)); see
Fisher, 402 F.3d at 1173. Generally, the Court reads pro se pleadings more liberally than those
prepared by a lawyer; however, pro se plaintiffs must still meet their jurisdictional burden. See
Haines v. Kerner, 404 U.S. 519, 520–21 (1972); Kelley v. Sec’y, U.S. Dept. of Labor, 812 F.2d
1378, 1380 (Fed. Cir. 1987).

1

The Budget Control Act requires a 5.7% reduction of certain government outlays, resulting in a
reduction of Ms. McCrory’s actual award amount to $1,694.31. (Compl. at ¶ 43).
2

Section 7623(a) of the Internal Revenue Code provides that the Secretary of the Treasury,
under “regulations prescribed by the Secretary, is authorized to pay such sums, as he deems
necessary for (1) detecting underpayments of tax . . . .” I.R.C. § 7623(a). Treasury regulations
provide that “the Whistleblower Office may pay an award under section 7623(a), in a suitable
amount, for information necessary for detecting underpayments of tax or detecting and bringing
to trial and punishment persons guilty of violating the internal revenue laws or conniving at the
same.” 26 C.F.R. § 301.7623–1(a) (2020). The language of the statute and regulation is
permissive: “as he deems necessary” and “the Whistleblower Office may pay an award” plainly
involve discretion. I.R.C. § 7623(a); § 26 C.F.R. 301.7623-1(a) (2020) (emphasis added).
In addition, case law cuts deeply against Ms. McCrory. First, the Federal Circuit has
specified that “the Tax Court has exclusive jurisdiction over claims based on § 7623.” Meidinger
v. United States, 989 F.3d 1353, 1358 (Fed. Cir. 2021). Ms. McCrory distinguishes her claim
from Meidinger stating that Mr. Meidinger’s claim fell under § 7623(b), whereas Ms. McCrory’s
claim falls under § 7623(a). (Pl.’s Resp. at 8–9); See Meidinger, 989 F.3d at 1358. However, the
Circuit’s finding in Meidinger applies to all of § 7623—if the Federal Circuit wished to limit its
jurisdictional finding to either § 7623(a) or § 7623(b), it would have.
Second, Ms. McCrory does not use a contract theory to establish jurisdiction, instead she
asserts that all claims under § 7623(a) became money-mandating in 2014 when the Secretary of
the Treasury promulgated “‘regulatory law’ at 26 C.F.R.§301.7623.1-4 [sic] . . . .” (Pl.’s Resp. at
6–7, 9 (“Plaintiff’s instant claim is distinguishable as an IRC §7623(a) award that became
money-mandating by regulation rather than by statute or contract.”) (emphasis added), ECF No.
11). Ms. McCrory asserts that under these regulations, payment of § 7623(a) claims is “as
mandatory as . . . § 7623(b) claims.” (Id. at 7). Ms. McCrory claims that “[w]hen 7623(a) claims
became money-mandating by regulation, such claims satisfied the statutory prerequisite for
jurisdiction of the Court of Federal Claims, while failing to meet the statutory prerequisites for
Tax Court appeal.” Id.
To establish jurisdiction for her claim, Ms. McCrory asks this Court to take several
impossible leaps; first, to determine that § 7623’s implementing regulations are moneymandating despite case law to the contrary; and second, to find that those regulations apply to all
awards under § 7623 despite to the “jurisdictional paradox” that creates. (Compl. at ¶ 25; See
Def.’s Mot. at 5). The Court of Federal Claims has held that “[s]ection 7623(a) and its
implementing regulations at 26 C.F.R. § 301.7623-1, et seq., are discretionary and not moneymandating.” Doe v. United States, 153 Fed. Cl. 629, 636 (2021) (Roumel, J.) (citing Cambridge
v. United States, 558 F.3d 1331, 1333 (Fed. Cir. 2009), and Merrick v. United States, 846 F.2d
725, 726 (Fed. Cir. 1988)). Therefore, “a whistleblower cannot pursue an award claim relying
solely upon the statute and implementing regulations.” Doe v. United States, 153 Fed. Cl. at 636
(citing Merrick, 846 F.2d at 725). Because § 7623(a) does not create a right to money damages,
it is fatal to Ms. McCrory’s claim. See Fisher, 402 F.3d at 1172.
The Tax Court’s exclusive jurisdiction over § 7623(b) claims is well established, which
creates the paradox in Ms. McCrory’s argument. (Def.’s Mot. at 5; see Dacosta v. United States,
82 Fed. Cl. 549, 555 (2008) (“[T]he Court holds that plaintiffs' claims based upon subsection
7623(b)(l) are within the exclusive jurisdiction of the Tax Court.”); see also Capelouto v. United
3

States, 99 Fed. Cl. 682, 691 (2011) (“Because Congress has vested the United States Tax Court
with subject matter jurisdiction over suits to recover an award under section 7623(b), such suits
are beyond the jurisdiction of this court.”)). If this Court were to find that § 7623(a) is indeed
“money mandating” by regulation (and therefore this Court has jurisdiction), it would create an
intra-statute split of exclusive jurisdiction between the Court of Federal Claims and the Tax
Court. (Def.’s Mot. at 5 (“[C]laims under § 7623(b)—i.e., claims involving more than
$2,000,000 in disputed proceeds—would assumedly remain exclusively within the jurisdiction of
the Tax Court. But claims under § 7623(a)—i.e., claims involving $2,000,000 or less in disputed
proceeds . . . would now be within the exclusive jurisdiction of [the Court of Federal Claims].”)).
Had this been Congress’s intent, it would have said so. The Court declines to interpret § 7623 or
26 C.F.R. § 301.7623 as creating such jurisdictional chaos.
While § 7623 is not a model of draftsmanship, it certainly does not grant the Court of
Federal Claims jurisdiction over Ms. McCrory’s claim. Therefore, the Court GRANTS
Defendant’s Motion to Dismiss, (ECF No. 10), and DISMISSES Plaintiff’s Complaint, (ECF
No. 1), for lack of subject-matter jurisdiction, pursuant to RCFC 12(b)(1). The Clerk SHALL
enter judgment accordingly. The Clerk is directed to REJECT any future submissions in this
case unless they comply with this Court’s rules regarding post-dismissal submissions.2
IT IS SO ORDERED.

David A. Tapp

DAVID A. TAPP, Judge

2

This provision does not act as an anti-filing injunction or a sanction. Allen v. United States, 88
F.4th 983, 989 (Fed. Cir. 2023) (holding that courts must provide pro se plaintiffs with notice
and opportunity to be heard before issuing an anti-filing injunction). Plaintiff is not enjoined
from proper post-dismissal filings in this case, nor is Plaintiff required to seek leave before filing
future actions in this Court. See id. This provision is a mechanism to reject non-compliant filings
in the above-captioned action once it is dismissed.
4