United States Tax Court

United States Tax Court

T.C. Memo. 2026-77

JEREMY BERENBLATT,

Petitioner

v.

COMMISSIONER OF INTERNAL REVENUE,

Respondent

__________

Docket No. 7208-17W.

Filed August 31, 2026.

__________

T. Scott Tufts and Scott J. Watnik, for petitioner.

Elizabeth C. Mourges, Ka Tam, and Alexandra E. Nicholaides, for

respondent.

MEMORANDUM OPINION

COPELAND, Judge:

Petitioner, Jeremy Berenblatt, seeks

review, pursuant to section 7623(b)(4), 1 of the Internal Revenue Service

(IRS) Whistleblower Office’s (WBO’s) final determination denying his

claim for award. As part of the Government’s multiyear prosecutions

against the promoters of abusive tax shelters, Mr. Berenblatt was

screened as a potential witness and interviewed once. Mr. Berenblatt

was not ultimately selected as a witness and had no further contact with

the IRS until he submitted his application for award seven years later,

after the Government had collected billions.

1 Unless otherwise indicated, statutory references are to the Internal Revenue

Code, Title 26 U.S.C. (I.R.C. or Code), in effect at all relevant times, regulation

references are to the Code of Federal Regulations, Title 26 (Treas. Reg.), in effect at all

relevant times, and Rule references are to the Tax Court Rules of Practice and

Procedure.

Served 08/31/26

2

[*2] Currently pending before the Court are the Commissioner’s

Motion for Summary Judgment (Docket Index No. 117) and Mr.

Berenblatt’s Motion for Partial Summary Judgment (Docket Index No.

214), respectively dated April 22, 2021, and December 5, 2024.

Background

The following facts are derived from the pleadings, the parties’

Motion papers, the Declarations and Exhibits attached thereto, the

Administrative Record filed with the Court, and our previous opinions

in this case, Berenblatt v. Commissioner (Berenblatt II), 160 T.C. 534

(2023), and Berenblatt v. Commissioner, T.C. Memo. 2026-75. They are

stated solely for the purpose of disposing of the parties’ Motion for

Summary Judgment and Motion for Partial Summary Judgment and

not as findings of fact.

On July 1, 2015, the WBO received Mr. Berenblatt’s Form 211,

Application for Award for Original Information, dated June 25, 2015.

An attached memorandum provided the substantive information for his

Form 211. Mr. Berenblatt sent the WBO a followup memorandum in

support of his Form 211, dated December 8, 2015. We refer to the June

25 memorandum and the December 8 memorandum collectively as the

Form 211 memoranda.

I.

The Form 211 Memoranda

The Form 211 memoranda set forth the facts alleged in this

paragraph and the paragraphs that follow. Mr. Berenblatt worked as a

stock trader in the late 1990s, with expertise in foreign currency

exchange. He earned a significant amount of income during the year

2000, after which he was approached about investing in a digital foreign

exchange option transaction (at times also referred to as short options

strategy (SOS)), which was billed as an opportunity for legally

minimizing taxes. A digital option is a type of option where the payoff

is either a fixed amount or nothing at all, depending on whether the

underlying asset passes a stated strike price.

Mr. Berenblatt completed an SOS investor application and

funded a trading account. However, he ultimately determined that the

probability of the transaction’s yielding a net positive payoff was

negligible, such that the transaction lacked a nontax business purpose

and was potentially fraudulent.

In the words of the June 25

memorandum: “[Mr. Berenblatt] concluded that it would be impossible

to ever make money, as the lottery payout [i.e., the nonzero option

3

[*3] payoff] would never materialize. . . . The only conceivable benefit

from the deal was the extraordinary tax benefit that had nothing to do

with any plausible return on the investment.” Mr. Berenblatt did not

move forward with the investment.

In late 2007 a special agent (SA) in the IRS’s Criminal

Investigation Division (CID) called Mr. Berenblatt to request a meeting.

The agent mentioned that the U.S. Government would soon convene a

grand jury investigation into some of the digital foreign exchange option

promoters. According to Mr. Berenblatt, in or around November 2007 2

Mr. Berenblatt met with Shawn Chandler, another CID SA, at SA

Chandler’s New York office. A third CID SA, Christine Mazzella, and

IRS Revenue Agent (RA) Arthur Mason also participated in the meeting.

During the meeting, Mr. Berenblatt related his analysis of the digital

foreign exchange option transaction to the agents. He explained that

the probability distribution for payoffs on the digital options was skewed

by the fact that the intermediary bank “controlled the trade and its

pricing.”

Mr. Berenblatt claims that he was the first person to provide the

IRS with a successful litigation tactic for proving the fraudulence of the

digital option, the short option, and other related abusive tax shelter

transactions. He claims that before his interview the IRS’s primary

litigating position was that those transactions fell afoul of the “step

transaction” doctrine—an argument that had failed in court. According

to Mr. Berenblatt, after his interview the IRS began winning cases

relating to the digital option, the SOS, and similar tax shelters by using

the reasoning he had provided to the IRS first.

Mr. Berenblatt seeks an award related to the U.S. Government’s

recovery of at least $1.4 billion in restitution, forfeiture, and settlement

proceeds and at least $5.9 billion in unpaid taxes stemming from digital

options and similar shelters.

II.

WBO Review

In July 2015 the WBO received Mr. Berenblatt’s whistleblower

award application. Following standard practice, Mr. Berenblatt’s

application was first reviewed by a classifier. The classifier, considering

only Mr. Berenblatt’s submission, determined that his claim potentially

2 IRS records date Mr. Berenblatt’s interview to September 24, 2007.

4

[*4] rated an H (high touch) designation. 3 The classifier began by noting

that “[t]he claims at issue have already been resolved resulting in

substantial tax collections. The WB claim is that he was the first

individual to provide the information in 2007.” The classifier then

detailed in etrak (the IRS’s Whistleblower Management Information

Tracking System) the following justifications for flagging Mr.

Berenblatt’s case as an H claim, all of which derive from a review of the

face of the Form 211 memoranda:

1) The date the information was provided to the IRS and

the date the 211 was submitted is longer than 6 months

2) The allegations concern tax shelters

3) The information was originally provided to an agent in

Criminal Investigation and resulted in successful

prosecution and conviction

In September 2015 the WBO assigned Senior Tax Analyst (STA)

Laura Meis to review Mr. Berenblatt’s whistleblower award application

as an H case. After reviewing the Form 211 memoranda, STA Meis

contacted SA Chandler, one of the CID SAs who had interviewed Mr.

Berenblatt in September 2007. STA Meis corresponded by email and

phone with SA Chandler, who related that (1) “[Mr. Berenblatt’s] claim

as being the first person to provide pertinent and relevant information

is not accurate”; (2) Mr. Berenblatt “had not provided any documents for

the investigation and . . . he was not called to testify [in any related

trials]”; and (3) the digital foreign exchange option investigation had

been ongoing for two years before Mr. Berenblatt’s interview.

SA Chandler soon thereafter submitted to the WBO a Form

11369, Confidential Evaluation Report on Claim for Award. SA

Chandler checked the “No” box next to the following pertinent questions

in item 11:

A. Did the Service use the information the whistleblower

provided to develop specific document requests or other

inquiries to the [allegedly noncompliant] taxpayer?

3 In the context of this case, a “high touch” designation apparently means that

the case warrants assignment to a senior WBO employee and potential coordination

with other IRS functions.

5

[*5]

B. Did the Service use the information provided by the

whistleblower to validate the completeness and accuracy of

the taxpayer’s response to information requests?

C. Did the whistleblower provide additional information

that would not have been obtained through general audit

or investigative techniques?

....

F. Did the whistleblower assist in obtaining the

cooperation of other individuals that provided information

relevant to the taxpayer’s liability or assets that would not

have been expected to be identified through other sources

of information?

G. Did the whistleblower provide technical or legal analysis

of the taxpayer’s records or transactions that would not

otherwise have been done by the Service?

H. Did the whistleblower identify connections between

transactions, or parties to transactions, which enabled the

Service to understand tax implications that might not

otherwise have been revealed?

I. Did the whistleblower provide continuing assistance

during the audit or investigation?

SA Chandler also included the following narrative with that Form

11369:

The investigation of the [target] taxpayers was well under

way by the time the Whistleblower met with, and provided

information to, Internal Revenue Service—Criminal

Investigation in or around November 2007. (See attached

articles: one regarding the law firm of [Taxpayer F],[4]

former employer of . . . [Taxpayer P] and [Taxpayer U],

ordered to pay a $76 million fine to the IRS in March 2007

and the other article dated May 18, 2006, regarding

4 Identifying information about the subjects of Mr. Berenblatt’s whistleblower

claims is being redacted in accordance with Rule 345(b) and this Court’s protective

order of August 7, 2017. The pseudonyms for the target taxpayers are taken from the

reference list of redacted information submitted by Mr. Berenblatt.

6

[*6]

[Taxpayer H’s] involvement relative to the tax shelter

transactions discussed by the Whistleblower.)

The

whistleblower was one of hundreds of individuals identified

as having had contact with the taxpayer(s) relative to the

tax shelter transactions at issue in the investigation. The

whistleblower did not provide any new information relative

to the investigation. The whistleblower was not considered

a viable potential witness in the investigation and did not

testify during the two criminal trials in this matter. In

addition, over 100 individuals had been interviewed in the

investigation at the point in time the Whistleblower met

with Internal Revenue Service—Criminal Investigation in

or around November 2007 and a vast number of financial

and tax related subpoenaed records had been analyzed as

well.

As indicated in the narrative, SA Chandler attached to Form

11369 several print articles from major news sources. These articles

reported the following pertinent information: (1) a law firm identified by

Mr. Berenblatt avoided prosecution in March 2007 by admitting that it

developed and marketed tax shelters and paying a $76 million penalty

to the IRS and (2) a bank identified by Mr. Berenblatt was the subject

of a federal investigation into digital options tax shelters as early as May

2006 because it had “engineered the losses through trades in options

that were designed to lose money.”

Sometime after her communication with SA Chandler, STA Meis

prepared a memorandum for the WBO recommending a preliminary full

denial of Mr. Berenblatt’s award application. In support of this

recommendation, STA Meis exclusively cited the claims, information,

and news articles relayed to her by SA Chandler. The WBO sent a

preliminary denial letter to Mr. Berenblatt dated January 4, 2017. STA

Meis then prepared a memorandum recommending a final full denial of

Mr. Berenblatt’s application. This memorandum provided substantially

the same supporting information as STA Meis’s earlier memorandum.

The WBO adopted STA Meis’s recommendation and sent Mr. Berenblatt

a final denial letter, dated March 2, 2017, explaining that “the IRS

identified the issue(s) prior to receipt of your information and your

information did not substantially contribute to the actions taken by the

IRS.”

7

[*7] Mr. Berenblatt timely submitted his Petition to this Court,

invoking our jurisdiction under section 7623(b)(4) to consider appeals of

whistleblower award determinations by the IRS.

Discussion

I.

Jurisdiction

The Tax Court is a court of limited jurisdiction and may exercise

jurisdiction only to the extent authorized by Congress. See I.R.C. § 7442;

McCrory v. Commissioner, 156 T.C. 90, 93 (2021). We had previously

assured ourselves of our jurisdiction in this case, see Berenblatt II, 160

T.C. at 544–45, and our conclusion remains undisturbed by the U.S.

Court of Appeals for the D.C. Circuit’s holding in Kennedy v.

Commissioner, 142 F.4th 769 (2025), aff’g in part T.C. Memo. 2021-3.

Absent stipulation to the contrary, appeal of this case would lie to the

D.C. Circuit under section 7482(b), and we follow its precedent

accordingly. See also Berenblatt II, 160 T.C. at 542 n.4; Kasper v.

Commissioner, 150 T.C. 8, 11 n.1 (2018).

II.

Standard of Review

The purpose of summary judgment is to expedite litigation and

avoid costly, unnecessary, and time-consuming trials. See FPL Grp.,

Inc. & Subs. v. Commissioner, 116 T.C. 73, 74 (2001). As a general rule,

we may grant summary judgment where there is no genuine dispute as

to any material fact and the movant is entitled to judgment as a matter

of law. See Rule 121(a)(2); Sundstrand Corp. v. Commissioner, 98 T.C.

518, 520 (1992), aff’d, 17 F.3d 965 (7th Cir. 1994). But a slightly

different standard applies when we review agency action—here, a

whistleblower award determination—under the Administrative

Procedure Act. Kasper, 150 T.C. at 14–15. In such cases we generally

“confine ourselves to the administrative record to decide whether there

has been an abuse of discretion.” See Van Bemmelen v. Commissioner,

155 T.C. 64, 78 (2020).

Our Rules recognize this distinction, clarifying that, in cases

where judicial review is based solely on the administrative record, Rule

121(a)(2) does not apply.

Instead, the parties must provide

“statement[s] of facts with references to the administrative record.”

Rule 121(j). Likewise, “[i]n reviewing a determination of the WBO, we

employ the standard of review of section 706(2)(A) of the Administrative

Procedure Act (APA), which tells a reviewing court to reverse agency

action that it finds ‘arbitrary, capricious, an abuse of discretion, or

8

[*8] otherwise not in accordance with law.’” Van Bemmelen, 155 T.C.

at 72 (quoting Kasper, 150 T.C. at 21). Because summary judgment

serves as a mechanism for deciding, as a matter of law, whether the

WBO’s determinations are supported by the administrative record, we

follow the same standard in reviewing summary judgment motions.

Further, in conducting this analysis, we do not substitute our

judgment for that of the agency. Rather, we confine ourselves to

ensuring that the WBO’s determination was “within the bounds of

reasoned decisionmaking.” Id. (quoting Dep’t of Com. v. New York, 139

S. Ct. 2551, 2569 (2019)). With respect to factual matters, we accept the

WBO’s determinations so long as they are not clearly erroneous. See

Kasper, 150 T.C. at 23 (citing Fargo v. Commissioner, 447 F.3d 706, 709

(9th Cir. 2006), aff’g T.C. Memo. 2004-13). Further, as the D.C. Circuit

explained in Trongone v. Commissioner, 181 F.4th 85, 90 (D.C. Cir.

2026), in whistleblower cases

we must ensure that the agency’s decision is “reasonable

and reasonably explained.” FCC v. Prometheus Radio

Project, 592 U.S. 414, 423 (2021). An agency’s decision fails

that test if it “runs counter to the evidence before the

agency.” Motor Vehicle Mfrs. Ass’n of the U.S. v. State

Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983).

III.

Statutory and Regulatory Background

Section 7623(b) authorizes the payment of mandatory awards “[i]f

the Secretary proceeds with any administrative or judicial action . . .

based on information brought to the Secretary’s attention” by a

whistleblower. 5 In 2014 the Treasury Department issued regulations

interpreting section 7623(b). T.D. 9687, 2014-36 I.R.B. 486. These

regulations define key terms used in the statute and supply examples

showing how these definitions apply. See Treas. Reg. § 301.7623-2. The

regulation provides that “the IRS proceeds based on information

provided by a whistleblower when the information provided

substantially contributes to an action against a person identified by the

whistleblower.” Id. para. (b)(1). The regulation also provides examples

of when the IRS “proceeds based on” a whistleblower’s information:

“when the IRS initiates a new action, expands the scope of an ongoing

action, or continues to pursue an ongoing action, that the IRS would not

5 Although the use of the colloquial term “whistleblower” is not controlling, we

note that an individual who is sought out by the government, and not one who seeks

out the government of his own volition, does not seem to be “blowing the whistle.”

9

[*9] have initiated, expanded the scope of, or continued to pursue, but

for the information provided.” Id. Conversely, the IRS does not “proceed

based on” the whistleblower’s information when it merely “analyzes the

information provided or investigates a matter raised by the information

provided.” Id. The D.C. Circuit upheld the validity of Treasury

Regulation § 301.7623-2 in the wake of Loper Bright Enterprises v.

Raimondo, 144 S. Ct. 2244 (2024). Lissack v. Commissioner, 125 F.4th

245, 249 (2025), aff’g 157 T.C. 63 (2021). Furthermore, the D.C. Circuit

has made clear that “the question whether the IRS ultimately collected

proceeds based on [a whistleblower’s] application is a merits question.”

Trongone v. Commissioner, 181 F.4th at 90.

IV.

Analysis

Mr. Berenblatt was interviewed on September 24, 2007, by SA

Chandler, SA Mazzella, and RA Mason. Mr. Berenblatt made clear that

he felt compelled to appear at the interview because “[the request for a]

voluntary appearance was quite involuntary.” He likewise made clear

that the interview was “a very hostile meeting.” At the interview, Mr.

Berenblatt began by explaining his professional background as a finance

professional, and the circumstances that led to his contacts with

Taxpayer F. He related how Taxpayer F described the SOS transactions

as sophisticated tax minimization trade strategies, and how Taxpayers

P and U pressured him to participate in such a transaction while

skirting his more technical questions. Mr. Berenblatt explained how,

although he had intended to participate in an SOS transaction, his

background as a trader allowed him to discern the transaction’s lack of

economic substance. Mr. Berenblatt claims that this point stunned the

IRS agents, especially considered in the light of the fact that he was the

only potential SOS investor who did not complete the transaction.

The IRS’s recollection of the interview, as documented in SA

Chandler’s Form 11369 narrative, is vastly different. SA Chandler

began by noting that the tax shelter promoter prosecutions, of which Mr.

Berenblatt’s interview was but one part, were well underway by the time

of Mr. Berenblatt’s interview. He further noted that the information Mr.

Berenblatt provided was not new relative to the investigation, and that

over 100 individuals had already been interviewed. He emphasized

news articles indicating that, before interviewing Mr. Berenblatt, the

IRS had already entered into a nonprosecution agreement with a law

firm involved in the SOS and related shelters, and that a bank involved

in similar shelters was being investigated by CID because it “engineered

the losses through trades in options that were designed to lose money,”

10

[*10] a basis identical to the legal theory Mr. Berenblatt claims to have

been the first to disclose. Finally, SA Chandler’s straight-ticket negative

responses to the plethora of questions on Form 11369 regarding the

whistleblower’s contribution to the development of facts confirmed that

the Service did not use Mr. Berenblatt’s information to any appreciable

degree.

Inaction can also be informative. Mr. Berenblatt did not provide

any documents, during the interview or after, that the IRS subsequently

used as the basis of any actions. Mr. Berenblatt was not ultimately

called as a witness in either of the trials for which he was considered.

And, most tellingly, Mr. Berenblatt was never recalled by the IRS for

further interviews. The Government’s negative action is inconsistent

with Mr. Berenblatt’s claim of providing groundbreaking information.

Moreover, Mr. Berenblatt had no contact with the IRS from his

interview in late 2007 until his submission of Form 211 in 2015.

Contrary to Mr. Berenblatt’s assertions, the record depicts a

single interview, which he was reluctant to attend, that was

unremarkable but for the idiosyncrasy that the interviewee began to

take part in, but did not complete his participation in, an SOS

transaction. Although Mr. Berenblatt argues that he paved the “yellow

brick road” for the IRS, he conveniently ignores that the IRS had already

found the proverbial wizard. The Government did not open any new

investigations on account of Mr. Berenblatt’s information.

The

Government did not expand the scope of any ongoing investigations on

account of Mr. Berenblatt’s information. The Government did not

continue pursuing an investigation it would have terminated but for Mr.

Berenblatt’s information. In sum, Mr. Berenblatt’s interview did not

alter the course of the SOS (and related tax shelter) promoter

prosecutions in any meaningful manner. Accordingly, he did not

“substantially contribute” to those actions in a way that would merit a

mandatory award pursuant to section 7623(b).

V.

Mr. Berenblatt’s Counterarguments

In response, Mr. Berenblatt levies a litany of objections: that the

WBO read out of section 7623 its “action requirement”; that the

temporal proximity between his interview and the IRS’s subsequent

successes prove his contribution; that SA Chandler’s Form 11369 was

deficient for a variety of reasons; that the WBO’s initial classification of

his claim as high touch ought to control; and that Trongone v.

11

[*11] Commissioner, 181 F.4th 85, controls and mandates partial

summary judgment in his favor. 6 They are unavailing.

A.

The “Action Requirement” of Section 7623

Mr. Berenblatt goes to great lengths to assert that the WBO

analyzed his claim without considering the “action requirement” of

section 7623. This argument is misplaced and rooted in an acontextual

reading of our caselaw. In Berenblatt II, 160 T.C. at 543, we noted two

prerequisites to a mandatory award under section 7623(b): (1) the IRS

must proceed based on a whistleblower’s information (the “action

requirement”), and (2) the IRS must collect proceeds as a result thereof

(the “collection requirement”). As previously noted, the IRS proceeds

based on a whistleblower’s information (i.e. satisfies the action

requirement) when said information substantially contributes to the

IRS’s actions. Treas. Reg. § 301.7623-2(b)(1). In other words, Mr.

Berenblatt’s invocation of the section 7623 “action requirement” merely

restates his claim of substantial contribution. Here, the action in

question is the prosecution of the SOS tax shelter promoters, in the

aggregate, and the core issue is not whether the IRS acted (it certainly

did), but whether Mr. Berenblatt’s part in the Government’s

prosecution, a single interview, substantially contributed to the

collection of over $7 billion. There is no genuine dispute as to these facts

such that on the basis of the record, the WBO reasonably found that he

did not substantially contribute. Accordingly, it properly applied section

7623, including its action requirement.

In the alternative, Mr. Berenblatt argues that his information

may have substantially contributed to the Government’s prosecution

even if it was not new to the IRS. Mr. Berenblatt layers speculation over

theory to hypothesize that his information corroborated what the IRS

already knew, in turn giving the Government greater confidence to

proceed using that information. This theory also fails: The fact pattern

is analogous to Example 3 of Treasury Regulation § 301.7623-2(b)(2).

The Example contemplates a whistleblower whose information only

“confirm[ed] the correctness of the IRS’s adjustments,” concluding that

such a whistleblower did not substantially contribute to the IRS’s action.

For the same reason, Mr. Berenblatt’s theory, even if correct, would not

entitle him to a mandatory award under section 7623(b).

6 Mr. Berenblatt first addressed Trongone in a Notice of Supplemental

Authority (Docket Index No. 231).

12

[*12] B.

But-For Causation

Mr. Berenblatt makes much of the temporal proximity between

his interview and subsequent results in the Government’s prosecution.

He claims that the Government’s subsequent successes—including the

“flipping” of Taxpayer N-K—stem from the information he provided. He

explains that Taxpayer N-K was the first to plead guilty, the first

domino whose plea resulted in a cascade of numerous other guilty pleas,

which, as best we can understand his argument, in turn led to the

collection of substantial proceeds from restitution, nonprosecution

agreements, and deferred prosecution agreements. He is essentially

arguing that but for his interview, the Government would not have

collected any proceeds. Nothing in the record supports this theory.

Taxpayer N-K is not mentioned in Mr. Berenblatt’s Form 211

memoranda. Moreover, even if Mr. Berenblatt singled out certain

taxpayers, an award requires more: His information must substantially

contribute to the recovery of taxes. The D.C. Circuit has rejected as

insufficient the but-for causation Mr. Berenblatt claimed. Lissack v.

Commissioner, 125 F.4th at 258 (“[Because a whistleblower award is

pegged to] the degree of substantiality of the whistleblower’s assistance,

the statute plainly means that all [whistleblower] awards depend on the

whistleblower having contributed in some substantial degree to the

Service’s ability to proceed. But-for cause is not enough.”).

C.

SA Chandler’s Form 11369

Mr. Berenblatt next raises a host of issues with the Form 11369.

First, he argues that Form 11369 should have been completed by

SA Mazzella and not SA Chandler because she was the lead agent on

the case. However, he cites no authority for this proposition. Even if

SA Chandler was not the lead agent on the case, he still had significant

involvement in the case and personally interviewed Mr. Berenblatt.

And he was certainly qualified to appraise the utility of Mr. Berenblatt’s

information; having interviewed over 100 other potential witnesses, SA

Chandler had more than enough experience to ascertain whether Mr.

Berenblatt’s information was new to the IRS or whether it would have

been of use in the ongoing investigations. Nor is the WBO obligated to

debrief every individual who had spoken with Mr. Berenblatt. In sum,

STA Meis did not abuse her discretion by obtaining a Form 11369 from

only SA Chandler.

13

[*13] Mr. Berenblatt vehemently discounts SA Chandler’s Form 11369

narrative as pure ipse dixit. Where SA Chandler’s narrative diverges

from Mr. Berenblatt’s Form 211, Mr. Berenblatt dismisses it as

counterfactual. Although Mr. Berenblatt cries bad faith, the mere

invocation thereof, without more, is insufficient to justify looking past

the administrative record at the facts underlying SA Chandler’s

statements. See Berenblatt II, 160 T.C. at 546. In the absence of a

concrete showing of bad faith, we decline Mr. Berenblatt’s invitation to

set aside SA Chandler’s narrative.

Mr. Berenblatt further critiques Form 11369, arguing that it is so

incomplete as to run afoul of Treasury Regulation § 301.7623-3 and

additionally does not satisfy the Internal Revenue Manual (IRM). This

attack also fails. In the first instance, the regulation in question

explains the necessary components of the administrative record for

whistleblower claims. It is not a directive to the operating divisions on

how to fill out the form. Moreover, SA Chandler’s Form 11369 adheres

to applicable regulatory requirements. As to Mr. Berenblatt’s IRM

argument, it is settled law that the IRM “does not have the force of law

and does not confer rights on taxpayers.” Fargo v. Commissioner, 447

F.3d at 713. Mr. Berenblatt therefore may not rely upon the IRM to

demonstrate the WBO’s error.

Mr. Berenblatt also targets the sufficiency of SA Chandler’s Form

11369 on the basis that it names only Taxpayers P, T, H, and F. On the

basis of only his Form 211 memoranda, Mr. Berenblatt asserts that SA

Chandler’s Form 11369 should have named Taxpayers P, T, H-P, F-M,

H, N, and individual taxpayers. However, on the actual Form 211 he

submitted, Mr. Berenblatt names only the following taxpayers in box 1:

Taxpayer P, Taxpayer F & its partners, Taxpayer H, Taxpayer U, and

investors in schemes marketed by the foregoing taxpayers. In the

aftermath of the SOS prosecutions, Taxpayer U became a part of

Taxpayer H. Taxpayers H-P, F-M, and N are notably absent from box 1

of Mr. Berenblatt’s Form 211. Thus, any omission on the Form 11369

simply mirrors Mr. Berenblatt’s submissions. And, at worst, this

constitutes harmless error; the WBO nonetheless analyzed the proper

claims. Again there is no genuine dispute as to a material fact.

D.

The WBO’s Initial Classification

Mr. Berenblatt’s next strike faults STA Meis for not according

greater weight to the classifier’s high touch rating. He claims that, since

the classifier graded his claim as high touch, the IRS had conclusively

14

[*14] determined that his information “resulted in successful

prosecution and conviction.” Mr. Berenblatt misunderstands the role of

the classifier within the whistleblower regime’s overarching structure.

A classifier is an employee of an operating division who functions as a

gatekeeper. See IRM 25.2.1.3.1 (Mar. 10, 2023) (“Classification’s role is

only to determine if the information on the Form 211 warrants further

review. It is not classification’s responsibility to determine whether a

whistleblower is entitled to an award.”). Indeed, if we agreed with Mr.

Berenblatt, there would be no need at all for the WBO; classifiers alone

would be sufficient. Here, the classifier determined, solely on the basis

of Mr. Berenblatt’s Form 211 submission, that Mr. Berenblatt’s claim

warranted further review. However, that a claim is not prima facie

unviable is not the same as saying that the claim is meritorious.

Ultimately, the H classification allowed STA Meis to research Mr.

Berenblatt’s claim in greater detail.

With a more complete

understanding of the facts, STA Meis determined that Mr. Berenblatt’s

information did not substantially contribute to any administrative or

judicial action. That her conclusion disagreed with the classifier’s initial

determination to investigate further does not mean that STA Meis’s

decision is arbitrary or capricious; rather, as already explained above,

STA Meis reasonably concluded that the IRS did not proceed based on

Mr. Berenblatt’s information. Nor is it a fatal error that the

administrative record does not contain the classification checklist. A

passing reference to the classification checklist does not necessarily

make it part of the record. See Berenblatt II, 160 T.C. at 552 n.8.

E.

Trongone

In a final bid, Mr. Berenblatt appeals to the D.C. Circuit’s recent

decision in Trongone v. Commissioner, 181 F.4th 85. However, neither

the facts nor the legal analysis therein is apposite here. Mary

Trongone’s WBO submission alleged that the targets violated the Code

from 2004 to 2012. She later argued that the violations continued from

2013 to 2017. The WBO denied her application for award in its entirety.

The D.C. Circuit partially disagreed, finding that the record was

thorough and well reasoned as to the 2004–12 period, but inadequate as

to the 2013–17 period. Accordingly, it reversed this Court with

instructions to remand to the WBO. The D.C. Circuit’s decision is a

straightforward application of the Chenery rule: An agency’s decision

can be judged only on the rationale provided. If we are to draw parallels

between this case and Trongone, the instant facts are akin to the 2004–

12 period rather than the 2013–17 period. The WBO compiled hundreds

of pages of documentation describing IRS–CID’s single interview with

15

[*15] Mr. Berenblatt, the course of the digital option shelter promoter

prosecutions, and Mr. Berenblatt’s minimal role therein. In sum, the

administrative record is thorough and more than adequately supports

the WBO’s decision to deny Mr. Berenblatt’s application for award.

VI.

Conclusion

After reviewing the administrative record, we do not find any

genuine disputes as to any material fact, and we conclude that the

WBO’s determination denying Mr. Berenblatt’s claim for award was not

“arbitrary, capricious, an abuse of discretion, or otherwise not in

accordance with law.” See Van Bemmelen, 155 T.C. at 72 (quoting

Kasper, 150 T.C. at 21). Accordingly, we will grant the Commissioner’s

Motion for Summary Judgment and deny Mr. Berenblatt’s Motion for

Partial Summary Judgment.

To reflect the foregoing,

An appropriate order and decision will be entered.