# United States Tax Court

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URL: https://www.frixlaw.com/law-library/documents/agency%3Atax-court%3A037a54396a49de88

## Record

- **Collection:** Agency decision
- **Document type:** Agency decision

## Text

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.

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/agency%3Atax-court%3A037a54396a49de88. Public record. Not legal advice.