T.C. Memo. 2014-93
UNITED STATES TAX COURT
WHISTLEBLOWER 13412-12W, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 13412-12W. Filed May 20, 2014.
Sealed, for petitioner.
Sealed, for respondent.
MEMORANDUM OPINION
KROUPA, Judge: This case is before the Court on the whistleblower’s
motion to proceed anonymously under Rule 345(a).1 The whistleblower has
1
All section references are to the Internal Revenue Code in effect for all
relevant times, and all Rule references are to the Tax Court Rules of Practice and
(continued...)
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[*2] satisfied the burden of showing that the risk of harm to the whistleblower
outweighs the public interest in knowing the whistleblower’s identity. We will
grant the motion and order that the record in this case remain sealed until further
order of this Court.
Background
The following information is stated only for purposes of resolving the
pending motion and not for purposes of establishing the validity of the
whistleblower’s claim.
Petitioner is a whistleblower that reported tax violations by the
whistleblower’s former employer (target) to respondent. The whistleblower
disclosed the nature of the tax violations and provided legal analysis and
reasoning for respondent to proceed against target. Nonetheless, respondent
issued the whistleblower a letter indicating that he was unable to collect any
amounts on the whistleblower’s claim. The whistleblower filed the petition
seeking judicial review of respondent’s determination.
The whistleblower is retired and receives retirement benefits from target.
The whistleblower asserts that the whistleblower should be permitted to proceed
1
(...continued)
Procedure, unless otherwise indicated.
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[*3] anonymously because, if the whistleblower’s identity is disclosed, target will
seek retribution. Specifically, the whistleblower asserts that target could withhold
or terminate the whistleblower’s retirement benefits. The whistleblower relies on
the retirement benefits and without them would be forced to seek future
employment. Additionally, the whistleblower alleges that, if the whistleblower’s
identity is revealed, the whistleblower will suffer professional ostracism, harm and
job-related harassment because other potential employers will unlikely want to
hire or employ a known tax whistleblower. Finally, the whistleblower asserts that
the motion should be granted because target may suffer financially if the details of
the whistleblower’s claim are publicized.
The whistleblower filed the motion to proceed anonymously at the same
time the whistleblower filed the petition. Respondent did not file an objection to
the motion.
Discussion
We must decide whether the whistleblower has satisfied the burden of
showing that the risk of harm to the whistleblower outweighs the public interest to
have access to the whistleblower’s identity. Deciding this issue will affect
whether the whistleblower may proceed anonymously.
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[*4] Recently, this Court adopted Rule 345 to create a mechanism to preserve the
anonymity of whistleblowers and non-party taxpayers. Whistleblowers seeking to
proceed anonymously must file a motion with this Court setting forth a sufficient
fact-specific basis for anonymity. Rule 345(a). The petition and subsequent
filings are temporarily sealed pending a ruling by the Court on the motion to
proceed anonymously. Id. A whistleblower is permitted to proceed anonymously
if the whistleblower presents a sufficient showing of harm that outweighs
counterbalancing societal interests in knowing the whistleblower’s identity. See
Whistleblower 14106-10W v. Commissioner, 137 T.C. 183 (2011); see also Does I
Thru XXIII v. Advanced Textile Corp., 214 F.3d 1058, 1068 (9th Cir. 2000). The
decision whether to allow a party to proceed anonymously rests within the sound
discretion of the trial court. Anonymous v. Commissioner, 127 T.C. 89, 94
(2006); see James v. Jacobson, 6 F.3d 233, 238 (4th Cir. 1993); see also sec.
7461(b)(1).
This Court has granted a whistleblower’s request to proceed anonymously
where the whistleblower was susceptible to professional stigma, retaliation and
economic duress. See Whistleblower 14016-10W v. Commissioner, 137 T.C. at
203-204 (granting the whistleblower’s motion to proceed anonymously, in part,
because disclosing the whistleblower’s identity could have adversely affected the
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[*5] whistleblower’s current and future employment). Moreover, this Court has
granted a motion to proceed anonymously where the taxpayer faced a risk of
severe physical harm if the taxpayer’s identity was revealed. See Anonymous v.
Commissioner, 127 T.C. at 94 (holding that risk of “severe physical harm” to the
taxpayer and taxpayer’s family outweighed the general public interest in knowing
the taxpayer’s identity). The Court’s decisions are consistent with the IRS
Whistleblower Office general administrative practice of keeping whistleblowers’
identities confidential. See Whistleblower 14106-10W v. Commissioner, 137 T.C.
at 205.
Although we have reservations about the alleged harm, we will err on the
side of caution and grant the whistleblower’s request to proceed anonymously.
The whistleblower has satisfied the whistleblower’s factual burden to proceed
anonymously. The facts alleged in the petition and the declaration attached to the
motion to proceed anonymously demonstrate that disclosure of the
whistleblower’s identity could result in the risk of retaliation, social and
professional stigma and economic duress. If target learned the whistleblower’s
identity, it could possibly withhold or terminate the whistleblower’s retirement
benefits. We are aware, however, that distributions from an employer’s retirement
plans are governed by the plan’s provisions and an independent trustee that has
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[*6] fiduciary obligations. The whistleblower relies on the retirement benefits and
without them would be forced to seek future employment. Moreover, because the
whistleblower would be a known whistleblower, the whistleblower might face
professional ostracism and difficulty securing future employment. In short, the
nature of the potential harm to the whistleblower outweighs the societal interest in
knowing the whistleblower’s identity.
For the foregoing reasons, we will grant the whistleblower’s motion to
proceed anonymously, and the record in this case will remain sealed until further
order of the Court.
An appropriate order will be issued.