T.C. Memo. 2014-94
UNITED STATES TAX COURT
WHISTLEBLOWER 10949-13W, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 10949-13W. 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 2 The whistleblower has
1
The Court is issuing this Memorandum Opinion because there is a lack of
whistleblower caselaw.
2
All section references are to the Internal Revenue Code in effect for all
(continued...)
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[*2] demonstrated that proceeding anonymously is necessary to protect the
whistleblower’s professional reputation, economic interests and personal safety.
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 a tax fraud scheme to the
Government. During the whistleblower’s employment, the whistleblower learned
of a tax structure involving the whistleblower’s employer and several related
entities and subsidiary companies (targets). When the whistleblower raised
concerns over the tax structure to the whistleblower’s employer, the
whistleblower’s employer used physical force and armed men to intimidate the
whistleblower and prevent disclosure. The whistleblower reported the tax scheme
to the Government and for several years assisted the Government in its
2
(...continued)
relevant times, and all Rule references are to the Tax Court Rules of Practice and
Procedure, unless otherwise indicated. All amounts are rounded to the nearest
dollar.
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[*3] investigation of targets. Based partly on the whistleblower’s information, the
Government eventually recovered more than $30 million in taxes, penalties and
interest.
On August 1, 2011, the whistleblower filed a Form 211, Application for
Award for Original Information, and submitted to the IRS Whistleblower Office
(Whistleblower Office) documentary evidence related to the targets’ actions the
whistleblower disclosed since December 20, 2006. The Whistleblower Office sent
the whistleblower an award determination under section 7623(a). The
whistleblower filed the petition seeking judicial review of the Whistleblower
Office section 7623(a) award determination.
The whistleblower was aware that the Government investigated targets for
potential ties to terrorist groups. Additionally, Department of Justice attorneys
informed the whistleblower that targets were connected to organized crime and
terrorism and could resort to physical force or harm in connection with their
activities. The whistleblower received a death threat from one of the targets
through its counsel. On one occasion the whistleblower used armed guards for
safety when the whistleblower traveled abroad. Additionally, targets have lodged
numerous litigation threats against the whistleblower relating to the whistleblower
claims.
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[*4] The whistleblower asserts that revealing the whistleblower’s identity would
result in the risk of retaliation, social and professional stigma, economic duress
and personal safety. Specifically, the whistleblower asserts that disclosing the
whistleblower’s identity will result in professional stigma and impair the
whistleblower’s livelihood by alienating the whistleblower’s potential clients and
business contacts. Finally, the whistleblower asserts that the whistleblower is of
an age and station in life that necessitates continued employment.
The whistleblower filed the motion to proceed anonymously at the same
time the whistleblower filed the petition. Respondent filed a notice of no
objection to the motion.
Discussion
We are asked to decide whether the whistleblower should be permitted to
proceed anonymously. Proceeding anonymously is necessary to protect the
whistleblower’s professional reputation, economic interests and personal safety.
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
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[*5] 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 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 taxpayer and taxpayer’s family outweighed general
public interest in knowing taxpayer’s identity). Moreover, 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. The Court’s
decisions are consistent with the IRS Whistleblower Office general administrative
practice of keeping whistleblowers’ identities confidential. See id. at 205.
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[*6] The whistleblower has satisfied the factual burden to proceed anonymously.
The facts alleged in the petition and the affidavit 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.3 Most importantly, disclosure of the whistleblower’s identity would place
the whistleblower at risk of physical harm. Targets are alleged to have ties to
terrorist organizations and have already used armed men to raid the
whistleblower’s offices. Moreover, one of targets previously threatened the
whistleblower’s life. Targets’ actions evidence a pattern of intimidation,
aggression and physical threats of harm towards the whistleblower. In short, the
nature and severity of potential harm that could befall the whistleblower outweigh
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.
3
It is also evident that revealing the whistleblower’s identity could adversely
affect the whistleblower’s professional reputation, current employment and future
employment opportunities.