Before Plager, Rader, and Bryson, Circuit Judges.
The opinion of the court was delivered by: Plager, Circuit Judge.
Appealed from: United States Court of Federal Claims
Judge Robert H. Hodges, Jr.
In this case, Gregory C. Krug, appealing pro se, claims a right to have a reward from the United States for information he gave the Internal Revenue Service ("IRS") regarding third-party taxpayers, information that the Government admits led to a recovery of millions of dollars in unpaid taxes. The IRS declined to make him a reward, and he sued.
In its April 30, 1998 decision, the Court of Federal Claims granted the Government's motion for summary judgment. See Krug v. United States, 41 Fed. Cl. 96 (1998). The court concluded that Mr. Krug was not contractually entitled to a reward for providing the IRS with information about alleged underpayments of income and gift taxes by the third-party taxpayers. The court also determined that the IRS did not abuse its discretion in denying Mr. Krug a reward. Because we conclude that the Court of Federal Claims correctly read the law, we affirm.
We have jurisdiction to hear this appeal under 28 U.S.C. § 1295(a)(3) (1994). Whether the Court of Federal Claims properly granted summary judgment is a question of law over which we exercise plenary review. See Applegate v. United States, 25 F.3d 1579, 1581 (Fed. Cir. 1994).
The crux of Mr. Krug's argument on appeal is that IRS Publication 733 in its current incarnation, and unlike its predecessors, creates an implied-in-fact contract obligating the Government to pay Mr. Krug for the information that he provided. Mr. Krug acknowledges that our precedents establish that 26 U.S.C. § 7623 and its implementing regulation, 26 C.F.R. § 301.7623-1(a), alone do not contractually bind the Government. See, e.g., Merrick v. United States, 846 F.2d 725, 726 (Fed. Cir. 1988). The Merrick court characterized § 7623 and its accompanying regulation as "an indefinite reward offer that an informant may respond to by his conduct," as distinguished from an "enforceable contract [that] arises when the parties fix the reward amount." See id. at 726.
Mr. Krug further acknowledges that, prior to 1980, Publication 733, the publication issued by the IRS which describes the Government's policy regarding informant's rewards, did not alone or in conjunction with the statute and the regulation create an enforceable contract. He distinguishes his situation from every other informant's case on the grounds that he relied on the post-1980 version of Publication 733 when he submitted the information which led to the investigations which led to the Government's recovery of the unpaid taxes.
Prior to its revision in July 1980, IRS Publication 733 (rev. 3-77) read in relevant part:
The District Director will determine whether a reward will be paid, and its amount. In making this decision, the information you provided will be evaluated in relation to the facts developed by the resulting investigation.
The Publication went on to explain that the reward will not exceed ten percent of the recovery, with a $50,000 cap. *fn1
After its revision in 1980, Publication 733 again begins with the first and second sentences quoted above. Then, however, the Publication states that: "Claims for reward will be paid in proportion to the value of information you furnished . . . . The amount of the award will be determined as follows . . . ." Thereafter, several paragraphs describe the formulae that will be applied to recoveries depending on the nature of the information supplied. *fn2
The trial Judge considered that the opening two sentences, unchanged by the 1980 revision, continued the operative legal effect of the pre-1980 law. That is, 26 U.S.C. § 7623 and its implementing regulation, along with the explanatory Publication 733 in its current version, still does no more than Merrick described: it floats an indefinite reward offer that an informant may respond to by conduct, ...