United States Tax Court

United States Tax Court

T.C. Memo. 2026-89

WHISTLEBLOWER 6417-20W,

Petitioner

v.

COMMISSIONER OF INTERNAL REVENUE,

Respondent

__________

Docket No. 6417-20W.

Filed September 17, 2026.

__________

Adam L. Pollock, for petitioner.

Aimee R. Lobo-Berg and Matthew A. Cappel, for respondent.

MEMORANDUM OPINION

URDA, Chief Judge: In this whistleblower award case petitioner

seeks review pursuant to section 7623(b)(4) 1 of a final determination by

the Internal Revenue Service (IRS) to deny petitioner’s claim for award.

The IRS teams that investigated the target taxpayer (Target) made

adjustments relating to certain issues connected with petitioner’s

allegations. The IRS nonetheless denied petitioner’s claim on the

grounds that it had “identified the issue(s) prior to receipt of

[petitioner’s] information and [the] information did not substantially

contribute to the actions taken by the IRS.” The IRS further explained

that “[t]he issues [petitioner] identified were already in the IRS audit

plan for [Target], information document requests had been issued, and

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

Code, Title 26 U.S.C. (I.R.C.), 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 09/17/26

2

[*2] there were no changes in the IRS approach to the issue after review

of the information [petitioner] provided.”

The Commissioner has filed a motion for summary judgment

contending that the denial of petitioner’s claim was not an abuse of

discretion. Petitioner counters that additional discovery was warranted

and that, in any event, the administrative record before the Court was

inconsistent with the reasons set forth in the denial and did not support

summary judgment. We have denied petitioner’s motion to compel

production of documents and now will grant the Commissioner’s motion

and sustain the IRS’s determination.

Background

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

motion papers (together with the attached declarations and exhibits),

and the administrative record filed with the Court. An appeal of this

case would ordinarily lie to the U.S. Court of Appeals for the

D.C. Circuit. See I.R.C. § 7482(b)(1) (flush language); Berenblatt v.

Commissioner, 160 T.C. 534, 542 n.4 (2023).

I.

Petitioner’s Claim for Award

On February 3, 2013, petitioner filed Form 211, Application for

Award for Original Information, with the IRS Whistleblower Office

(WBO). Petitioner identified ongoing tax underpayments by Target, a

large multinational corporation, starting in Target’s 2003 tax year.

Petitioner’s allegations sounded in transfer pricing, a major tax

enforcement area that relates to the proper prices charged by related

parties in transactions between them. See I.R.C. § 482; see also Boris I.

Bittker & Lawrence Lokken, Federal Taxation of Income, Estates & Gifts

¶ 79.1 (3d ed. 1999). Section 482 “authorizes the IRS . . . to adjust

transfer prices because such prices determine the allocation of income

between the commonly controlled taxpayers.” Bittker & Lokken, supra,

¶ 79.1.

According to petitioner, the alleged underpayments arose from

Target’s “profit shifting strategy involving under-allocation of US

operating expenses to foreign affiliates.” Although petitioner recognized

that the IRS had scrutinized assorted transfer pricing issues, petitioner

contended that the IRS was looking in the wrong place.

3

[*3] Specifically, petitioner noted that “the IRS ha[d] reviewed

[Target’s] cost sharing arrangement for product development expenses

(including buy-in payment[2]), but ha[d] never examined [Target’s]

treatment of non-technology intangibles and services.” As petitioner

explained:

[Target’s] non-development costs have grown to be 7 times

the development expenses during the period under review,

representing 86% of the total operating costs of [Target],

which now contributes as much if not more than the cost

shared intangibles, yet these costs are not charged,

resulting in negative profit margins on US expenses that

benefit foreign profitability. According to advisors for

[Target], the IRS has never identified this as an

examination issue.

Petitioner further asserted that Target’s profit-shifting activities

had been facilitated by a business restructuring and “involve a

combination of under-pricing both its cost sharing buy-in payments, and

under-allocation of annual expenses incurred for the benefit of foreign

affiliates, through aggressive and incorrect application of transfer

pricing methods.” Among other things, petitioner stated that Target did

not charge its foreign affiliates for nonroutine management

contributions, management system intellectual property, and its

customer list.

The Form 211 supported its assertions with petitioner’s

recollection of conversations with a third-party “advisor” of Target,

calculations based on Target’s Securities and Exchange Commission

(SEC) filings, and various publications regarding Target’s operations.

As most relevant here, petitioner’s discussions with Target’s advisor

came in the context of pitch meetings with multiple companies for

2 Under Treasury regulations in place until 2011, the term “buy-in payment”

as used in the transfer pricing context referred to compensation solely for the use of a

preexisting intangible. See Treas. Reg. § 1.482-7(g)(2) (1995). To explain more fully,

“[w]here parties . . . enter[] into a qualified cost sharing arrangement (QCSA), they

share the cost of developing intangible property.” Amazon.com, Inc. & Subs. v.

Commissioner, 148 T.C. 108, 150–51 (2017), aff’d, 934 F.3d 976 (9th Cir. 2019). “When

one participant . . . makes pre-existing intangible property available for purposes of

research under a QCSA, that party is deemed to have transferred an interest in such

property to the other participant.” Id. at 151. “This requires the other participant . . .

to make a ‘buy-in payment’ to the transferor.” Id. The Secretary later finalized

regulations that replaced the notion of a buy-in payment with the concept of a

“platform contribution transaction” (PCT). See T.D. 9441, 2009-7 I.R.B. 460, 462–63.

4

[*4] petitioner’s tax compliance services. The Form 211 reflects that

Target’s advisor generally explained to petitioner Target’s approach to

transfer pricing, which involved disaggregating transactions to limit

profitability and using a cost-sharing agreement. The advisor noted

that “the IRS had never examined [Target’s] transfer pricing for head

office services, network intangibles, or any non-cost sharing related

transfer pricing.” Target’s advisor, however, did not have “direct access

to the cost sharing calculations” or a full picture of the various

components of Target’s transfer pricing analysis.

Petitioner believed that the information “implie[d] that [Target]

is undercharging its foreign affiliates for management and operational

services, and improperly valuing its cost sharing transactions.”

Petitioner did not provide actual details regarding Target’s purported

transfer pricing violations. Rather, petitioner deduced a likelihood of

violations from the pieces of information that had been assembled.

Petitioner argued that an investigation into transfer pricing issues

commonly associated with large multinational companies, such as the

allocation of expenses incurred on nontechnology intangibles and

services, would lead to a tax recovery.

The Form 211 was not petitioner’s first brush with the IRS

whistleblower process—just the year before petitioner had filed eight

claims relating to various targets. On February 6, 2013, more than two

weeks before the IRS issued its letter acknowledging receipt of

petitioner’s claim, petitioner wrote WBO Senior Program Analyst (SPA)

Steven Mitzel with an appendix to petitioner’s Form 211.

The WBO sent petitioner a letter on February 21, 2013, that

acknowledged receipt of petitioner’s Form 211 and assigned a claim

number. Shortly after the acknowledgment letter was sent, petitioner

again wrote SPA Mitzel, transmitting, inter alia, an addendum dated

March 1, 2013.

The addendum reported two February 2013 pitch meetings

between petitioner and Target’s representatives regarding the provision

of specialized technology to assist Target’s computation of cost-sharing

transactions. Petitioner saw the discussion as confirming his views that

Target was shifting profits that belong to the United States to foreign

tax havens using nonroutine management contributions, undercharging

for Target’s trademark, and not charging foreign affiliates for access to

Target’s users. Much of the addendum repeated the allegations of

petitioner’s Form 211. Petitioner noted that Target’s representatives

5

[*5] with whom petitioner spoke “may not be aware of any facts”

relating to petitioner’s theories and explained that one spreadsheet that

petitioner took as confirmation “did not contain the source calculations,

so [is] not informative of how the company computes its RAB share, or

its head office calculations.”

In March 2013 the Form 211 was forwarded to the Office of IRS

Chief Counsel for a “taint review.” See Internal Revenue Manual

(IRM) 25.2.1.4.3(5) (Jan. 11, 2018). This review is designed to ensure

(among other things) that the information supplied by the whistleblower

was not obtained illegally or subject to a valid claim of privilege.

IRM 25.2.1.4.3(3), 25.2.1.4.3(5).

In April 2013 the IRS Office of Chief Counsel and an IRS subject

matter expert interviewed and debriefed petitioner regarding six

whistleblower claims that petitioner had filed in 2013, including this one

before the Court. As explained during the meeting, petitioner was never

employed by Target and never provided any tax or accounting services

to Target. Likewise, the advisor on whom petitioner relied did not work

for Target but had reviewed “how [it] do[es] [its] allocations,” which the

advisor communicated to petitioner in connection with pitching work to

Target. Petitioner further acknowledged reliance solely on SEC filings

in concluding that Target had committed tax violations. As petitioner

saw it, petitioner “put all the pieces together for the IRS to give them

the road map into how this is occurring because none of this would be

evident on its own.”

On July 3, 2013, petitioner’s Form 211 was forwarded to a

component of the IRS Large Business and International Division (LB&I)

responsible for examining Target’s 2008 and 2009 tax returns (Team 1). 3

Petitioner’s claim was available to Team 1 beginning on August 20,

2013.

3 Target’s audit for the 2008–09 cycle originated with the IRS Large & MidSized Business Division (LMSB). On October 1, 2010, LMSB was renamed LB&I. See

IRS News Release, IR-2010-88 (Aug. 4, 2010).

6

[*6] II.

A.

Examination into Target

2003–07 Tax Returns

Target was a Coordinated Industry Case (CIC) taxpayer and

generally subject to continuous examination. 4 See IRM 4.45.1 (May

2005). The IRS completed its examination into Target’s 2003–07 tax

returns in early 2013, after the Form 211 was filed but before

petitioner’s claim was available to Team 1.

During this examination, the IRS investigated issues relating to

the allocation of various expenses among Target and its foreign

affiliates, including cost-sharing payments for product development,

cost-sharing payments for services, and acquisition buy-in payments.

This examination involved interviews with Target executives to

understand its approach to allocation of costs among Target and its

foreign affiliates.

The IRS thereafter issued notices of proposed adjustment

(NOPAs), which explored, inter alia, the allocation of costs, including

buy-in payments and marketing, operating, and general and

administrative costs, among Target and its foreign affiliates under

various agreements. The NOPAs delved into the proper methodologies

to determine the allocation of different costs under transfer pricing

regulations, including Treasury Regulation §§ 1.482-1, -2, -4, -5, and -7.

The NOPAs reflected a sensitivity to changes in Target’s business over

time stemming from business restructuring and different agreements

among Target and its foreign affiliates. As particularly relevant here,

two NOPAs were explicitly focused on appropriate compensation for

operational and administrative services Target performed for foreign

affiliates.

Form 3610, Audit Statement, for Target’s 2003–06 tax returns,

which was dated May 20, 2013, reflected significant adjustments to

Target’s taxable income for 2005 and 2006 related to foreign affiliate

cost-sharing payments for product development, foreign affiliate cost-

4 The CIC program was replaced by the Large Corporate Compliance program

beginning with 2017 tax returns. IRM 4.50.3.1.1 (May 24, 2021).

7

[*7] sharing payments for services, and for foreign affiliate buy-in

payments, consistent with the NOPAs that had been previously issued. 5

B.

2008 and 2009 Tax Returns

The IRS began its examination of Target’s 2008 and 2009 tax

returns on August 3, 2011, with time and resource constraints limiting

the scope of the examination “to recurring and significant issues”

identified during risk analysis. The original audit timeline anticipated

the completion of risk analysis and an audit plan by November 1, 2011,

the issuance of all information document requests (IDR) to Target by

February 1, 2013, and the issuance of all NOPAs by May 31, 2013.

The IRS’s anticipated timeline slipped a little from the start, with

the issuance of the risk analysis and audit plan on December 1, 2011.

The first issues identified on the risk analysis worksheet related to costsharing and service payments for foreign affiliates. In both regards, the

IRS noted that the “[m]ethod of allocation [had been] established in [the]

prior cycle” and that the IRS would “[c]onfirm that methodology has

been properly applied.” Many of the other issues listed on the risk

analysis related to cost-sharing payments for particular acquisitions

and the knock-on effects of Target’s restructuring.

The IRS examining officer responsible for international issues

began work with the August 3, 2011, opening conference. From August

2011 through January 2013, the international examiner worked

through assorted international topics. The international examiner’s

risk analysis worksheet dated October 4, 2011, reflected the

identification of a major transfer pricing issue relating to a particular

acquisition buy-in payment, which became the subject of discussions

with Target between January and April 2013.

As part of the examination, the international examiner issued 65

IDRs on international issues, with all of these IDRs issued by May 20,

2013. The IDRs issued after petitioner’s Form 211 became available to

Team 1 related exclusively to a potential deduction outside the scope of

petitioner’s allegations.

5 Although the audit statement related specifically to Target’s 2003–06 tax

returns, the narrative memorandum recommending that petitioner’s claim relating to

2008 and 2009 tax returns be denied clarified that the 2003–07 audit years “were

closed from the field” and “settled in Appeals in early 2013,” before LB&I’s receipt of

petitioner’s Form 211.

8

[*8] The IRS also issued 30 NOPAs during the examination. As

relevant here, the international examiner had begun drafting the NOPA

on the particular acquisition buy-in payment issue in July 2013,

approximately one month before petitioner’s claim became available to

Team 1. The work on this NOPA followed explicit identification of the

issue as part of the IRS’s midcycle risk analysis of November 8, 2012,

and the four months of conversations with Target in 2013.

The drafting of the acquisition buy-in payment NOPA continued

until March 2015, when the NOPA was issued. Referral to the Office of

Appeals on this issue followed, which ultimately was resolved in late

2016.

As Team 1 worked through the acquisition buy-in payment issue

(and other non-transfer-pricing issues), petitioner supplemented the

original Form 211 several times between 2013 and 2015. Most of these

supplements arrived between September 2013 and January 2014, with

a law firm representing petitioner sending the last two in April and

December of 2015. These supplements, which were duly transmitted to

Team 1 through December 2015 (when the examination was transferred

to a successor examination team for the next cycle of years, as will be

discussed), did not address the particular acquisition buy-in payment

that had become Team 1’s international focus.

They instead

(1) continued to assert that Target had improperly allocated general and

administrative expenses among Target and its foreign affiliates, the

main thrust of petitioner’s initial claim, (2) provided analyses of costsharing regulations and mechanisms to detect violations, (3) supplied

business journals and newspaper articles related to Target, and

(4) transmitted white papers addressing proper allocation of

headquarters’ costs to foreign affiliates.

One of the supplements petitioner provided contained a

spreadsheet that purportedly included Target’s internal calculations of

its various service allocations for the 2012 tax year. Petitioner admitted

that “[t]he spreadsheet has more calculations and tabs,” which

petitioner did not have access to, but believed “examiners probably don’t

have access to” the information he provided. Petitioner attempted to

reconcile differences between the spreadsheet and Target’s actual costs

disclosed in its financial statements to show how Target was

perpetuating its alleged scheme.

9

[*9]

C.

2010–13 Tax Returns

The opening conference for the audit of Target’s 2010–13 tax

returns was held in May 2015. Although a different audit team (Team 2)

was assigned to this cycle, certain personnel overlapped, and

information was freely shared with the new team. Unlike the “limited

focus” examination of Target’s 2008 and 2009 tax returns, Team 2

conducted an examination for the 2010–13 tax returns without

restrictions.

The examination took place in the wake of the IRS’s issuance of

its Transfer Pricing Audit Roadmap in February 2014, which provided

IRS employees with audit techniques and tools to assist in the planning,

execution, and resolution of transfer pricing examinations. See Internal

Rev.

Serv.,

Transfer

Pricing

Audit

Roadmap

(2014),

https://www.irs.gov/pub/irs-lbi/final-tr-fprc-road-map.pdf (Roadmap).

The Roadmap stated that, before the opening conference with a

taxpayer, the examination team will (1) perform research regarding the

taxpayer’s background, history, and core business operations,

(2) consider results and reports from prior audit cycles, and (3) review

the taxpayer’s tax return for controlled transactions. See id. at 5–7. The

Roadmap further suggested that the examination team obtain

accounting records and any contemporaneous transfer pricing

documentation prepared in compliance with section 6662(e), 6 as well as

hold “orientation” meetings regarding financial statements and pricing.

See Roadmap, supra, at 8–10.

Consistent with the procedures outlined in the Roadmap, Team 2

performed research before the opening conference regarding Target’s

2010–13 tax years. Specifically, it reviewed SEC Forms 10-K, Annual

Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of

1934, Forms 1120, U.S. Corporation Income Tax Return, information

from previous audit cycles, merger and acquisition information,

6 Section 6662(e)(3)(B) provides for an exclusion from the definition of “net

section 482 transfer price adjustment” of certain adjustments for purposes of

calculating the substantial valuation misstatement penalty. To qualify for this

exclusion, a taxpayer must maintain “documentation (which was in existence as of the

time of filing the return) which sets forth the determination of such price in

accordance” with a transfer pricing method set forth in regulations or, if none of the

specified methods would clearly reflect income, another pricing method that “was

likely to result in a price that would clearly reflect income.” I.R.C. § 6662(e)(3)(B)(i)(II),

(ii)(I) and (II).

10

[*10] segmented financial statements, a corporate timeline, and section

6662(e) materials that Target supplied.

Between the beginning of the examination and December 1, 2015,

Exam Team 2 issued 46 IDRs, some of which addressed outbound

income shifting in connection with services. By November 19, 2015, the

international examiner assigned to this examination had prepared a

risk analysis worksheet. Among other issues for particular attention,

the international examiner identified (1) charges foreign affiliates paid

Target for sales, marketing, general, and administrative services,

(2) payments from foreign affiliates to Target for system operation

services, (3) foreign affiliates’ platform contribution payments under

cost-sharing and other agreements for certain intangible property that

Target had acquired, (4) foreign affiliates’ shares of intangible

development costs, and (5) potential impact on foreign affiliates of a

reorganization of certain entities owned by Target. For most of these

issues, the international examiner sought to verify the reported charges

and payments were at arm’s length under transfer pricing regulations.

In April 2016 an IRS economist drafted a memorandum analyzing

the methods petitioner employed in the original submission and two

supplemental submissions to estimate Target’s potential tax violations.

The economist identified at least three difficulties in the primary

method petitioner used, including reliance on “too general” public

information without reference to any specific controlled transactions

and lack of basis for critical assumptions. The economist pointed out

that petitioner’s corroborating methods suffered from the same flaws, as

well as potentially sweeping into the analysis unrelated revenue and

profit figures. Finally, the economist analyzed two of petitioner’s

supplemental submissions on cost allocations, taking issue with one

submission for lack of “quantitative data, analysis or evidence,” and the

other for employing “a number of restrictive assumptions that limits its

applicability to real world situations.”

The 2010–13 examination cycle ultimately led to the issuance of

agreed-upon NOPAs in 2019 with respect to (1) the foreign affiliates’

platform contribution payments for certain intangibles acquired by

Target and (2) the foreign affiliates’ charges for Target’s sales,

marketing, general, and administrative services. The NOPAs regarding

platform contribution payments reflected that Target and the IRS had

agreed to the proper method to be used to determine the payments and

negotiated certain price adjustments. The NOPAs relating to the service

charges reflected that the IRS disputed Target’s allocation method,

11

[*11] which ultimately led to significant adjustments for each year. The

adjustments embodied in the NOPAs were incorporated into

Forms 4549-A and 4549-B, Income Tax Examination Changes, for

2010–13.

III.

Evaluation of Petitioner’s Claim

Members of Teams 1 and 2 completed Forms 11369, Confidential

Evaluation Report on Claim for Award, with attached narrative

summaries, for the audit of Target’s 2008 and 2009 tax returns and the

audit of its 2010–13 tax returns, respectively. See IRM 25.2.1.5.5

(Jan. 11, 2018).

A.

Team 1: 2008 and 2009 Tax Returns

In December 2018 Team 1 submitted a Form 11369 and narrative

memorandum (among other documents) recommending that petitioner’s

claim be denied with respect to the 2008 and 2009 tax returns. The

Form 11369 explained, inter alia, that “[n]one of the adjustments

[proposed during Target’s examination] are related to [petitioner’s]

information because the risk analysis was performed prior to the receipt

of [petitioner’s] claim.”

The memorandum summarized petitioner’s claim as asserting

that Target had engaged in profit-shifting to foreign tax havens

“resulting primarily from the lack of head office service allocations, nonallocation of non-routine contributions by U.S. management, the

undercharge for license of [Target’s] trademark, and the non-charge for

access to [Target’s] network of users.” The memorandum further saw

petitioner as alleging that management services were being provided to

foreign affiliates at no cost and that Target had undervalued buy-in

payments.

The memorandum concluded that petitioner’s “claim did not help

in the Examination.” It pointed out that Team 1’s examination, limited

in scope to issues identified in risk analysis “due to time and resource

constraints,” had begun more than two years before petitioner’s claim

was available to the field. The risk analysis that set out the general

metes and bounds of the examination was completed on December 1,

2011, more than a year and a half before petitioner’s claim found its way

to Team 1 in August 2013.

As further explained in the memorandum, all 65 IDRs issued by

the international examiner predated the availability of petitioner’s

12

[*12] claim, and the international examiner had identified and

discussed the major transfer pricing issue regarding a particular

acquisition buy-in payment between January and April 2013, months

before petitioner’s claim became available to Team 1. The memorandum

explained that the international examiner had proceeded to draft the

NOPA regarding this topic before the claim was available, although the

NOPA was ultimately issued in 2015. The memorandum summarized

that “potential IRC § 482 issues were already identified and fully

developed and the audit team was in the process of writing up the

NOPA” by the time petitioner’s claim was available to the field and that

“none of the information stated was utilized or assisted in developing

IRC § 482 issues.” 7

Although the examination continued into 2018 with respect to one

additional issue that Target had identified, Team 1 explained that the

issue was not addressed in petitioner’s claim and the IRS’s action thus

was not relevant.

Along with the Form 11369 and narrative memorandum, Team 1

included, inter alia, (1) Form 870, Waiver of Restrictions on Assessment

and Collection of Deficiency in Tax and Acceptance of Overassessment,

dated March 20, 2014, along with Forms 4549-A and 4549-B and

(2) Form 870 dated November 29, 2018, and supporting Forms 4549-A

and 4549-B. The former set of documents reflected Target and the IRS’s

March 2014 agreement as to the vast majority of adjustments that had

been the subject of the examination. The latter set of documents dealt

with the agreement later reached in 2018 as to the three remaining

adjustments, including the acquisition buy-in payment.

B.

Team 2: 2010–13 Tax Returns

In March 2019 Team 2 submitted a Form 11369 and a narrative

memorandum (among other documents) for the audit of Target’s

2010–13 tax returns.

Again, denial of petitioner’s claim was

recommended.

The Form 11369 included a top-level review of petitioner’s claim,

as well as the status of the examination into Target’s 2010–13 tax

returns. Team 2 identified five potential issues in petitioner’s claim:

7 The memorandum for the 2008–09 audit cycle reflected that the 2003–07

audit years “were closed from the field” and “settled in Appeals in early 2013.” The

memorandum further noted that the audit of Target’s 2010–13 tax returns had begun

in May 2015 and would be addressed with a separate Form 11369 by other personnel.

13

[*13] (1) Target’s failure to charge foreign affiliates an arm’s-length

price for nonroutine management contributions; (2) Target’s failure to

charge foreign affiliates for management systems as required by

Treasury Regulation §§ 1.482-9 and -4; (3) Target’s failure to bear a

proportionate amount of transaction losses and business acquisitions

and restructuring costs, including buy-in payments for acquired

intangibles; (4) Target’s failure to charge an arm’s-length price for

marketing and trademark intangibles; and (5) Target’s failure to charge

its foreign affiliates for exploitation of the value of its customer base.

Team 2 indicated on the Form 11369, however, that petitioner’s

information was not uncommon to this type of taxpayer and did not

constitute information not previously known or well understood by the

IRS. Team 2 further represented that petitioner’s information did not

lead to modifications in the audit plan, was not used to prepare IDRs or

confirm responses, did not constitute material that the IRS would

otherwise not have obtained, and did not identify connections between

transactions or parties that enabled the IRS to better understand the

tax implications.

The memorandum “evaluate[d], for 2010–2013 audit cycle started

in March 2015, whether the I.R.S. exam team . . . was already aware of

the alleged issues identified by [petitioner] from our standard auditing

procedures, and, if it was, to what extent Exam developed such issues

for the audit cycle.” In the memorandum Team 2 explained that its

standard review of documents identified multiple transfer pricing

issues, including the lower revenue amounts generated by Target than

by its foreign affiliates, Target’s substantially lower effective tax rate,

the relatively small percentage of Target’s worldwide income reflected

on its Forms 1120, and various transactions for intercompany services,

cost-sharing arrangements, and platform contribution transactions.

The memorandum further reflected that Target provided section 6662(e)

documentation in May 2015, which allowed for a deeper review of

specific controlled transactions, respective transfer pricing methods,

intercompany agreements and worldwide entity organizational

structures, as well as underlying transfer pricing computations and

supporting data.

The memorandum stated that Team 2 identified the specific

transfer pricing issues enumerated in its risk analysis from this review,

including (1) Target generated less U.S. than foreign revenue;

(2) effective tax rates were substantially lower than the federal statutory

rate of 35%; (3) corporate tax return analysis showed that only 37% to

39% of Target’s worldwide income was included; (4) corporate tax return

14

[*14] disclosed certain controlled transactions involving intercompany

services, cost-sharing arrangements, and platform contribution

transactions; and (5) management services agreements among Target

and foreign affiliates.

The memorandum explained that after identifying the transfer

pricing issues in its preliminary review, Team 2 obtained additional,

more specific information by issuing IDRs and meeting representatives

of the Target during 2015 and 2016. The meetings with Target

representatives broached Target’s “significant transactions and major

intercompany transaction flow” for the years at issue, as well as

overviews of Target’s accounting policy and transfer pricing workbook.

The memorandum contrasted the information Team 2 had

obtained from standard IRS audit procedures with the information

petitioner provided, noting that petitioner’s “allegations were too

general and unsupportable as they were mainly based on public

information.” It further pointed out that petitioner’s suggestions for

conducting the audit tracked the standard procedures in the Roadmap

and “did not shed any new perspective [on the] examination.” Finally,

the memorandum stated that petitioner’s economic analyses did not

provide any insights as “[t]hey were based on unsupportable

assumptions[,]

made

no

reference

to

specific

controlled

transactions[, and] lack[ed] . . . comparability analyses.”

C.

WBO

In November 2019 after reviewing the Forms 11369 and

accompanying information, WBO Senior Tax Analyst (STA) Felipe

Castellanoz drafted a preliminary determination letter and an award

recommendation memorandum recommending denial of petitioner’s

claim. During approval review, Steven Mitzel (who had been promoted

to WBO program manager) requested that STA Castellanoz obtain

additional information regarding the timing of issue identification by

Team 2. Accordingly, STA Castellanoz requested that Team 2 provide

“something to specifically show [it] was aware of the . . . issues prior to

receiving [petitioner’s] claim in 2013.” As Team 2 understood it, he

wanted “[s]omething that would support [Team 2’s assertion in its

denial recommendation that] including these issues in the risk analysis

for 2010–2013 was not affected by [petitioner’s] claim.”

Team 2 responded by pointing to the final report from the Office

of Appeals for the 2003–06 audit cycle, which had been prepared before

15

[*15] petitioner’s claim was available to the field. Team 2 noted that

the report showed adjustments relating to transfer pricing issues during

the 2003–06 audit, including cost-sharing payments for product

development, cost-sharing payments for services, and acquisition buy-in

payments. Team 2 further transmitted six NOPAs that addressed each

of these issues in detail for various years.

According to Team 2, the 2003–06 documentation demonstrated

that the IRS had been long aware of the general transfer pricing issues

petitioner raised and specifically had investigated the issues in its last

full examination into Target. As Team 2 explained: “[A]s exam teams

from one cycle transition over to the next cycle and share information,

the audit issues and risks for these IRC 482 areas were taken into

consideration by subsequent Exam teams for [Target] and all of its

significant subsidiaries.” Team 2 stated that the documentation

specifically showed awareness of “buy-in, which subsequently (and

naturally) included acquisition buy-ins and platform contribution

payments [PCT].” “In conclusion, the 2010–2013 audit adjustments

related to PCT . . . and SG&A [sales, general, and administrative]

services (alternatively called management services) . . . arose from risks

that the Exam [team] had already been aware of from previous cycles

and were not based on any [petitioner] claim information.”

On March 27, 2020, STA Castellanoz completed a revised award

recommendation memorandum, concluding that the “issues were

already identified and being developed by the field team prior to

receiving the [petitioner’s] whistleblower submission for consideration.”

As to the 2008–09 audit cycle, he explained that the relevant “issues

were already identified and fully developed and the audit team was in

the process of writing up the [pertinent] NOPA” by the time the claim

was available to the field, noting further that the claim and supplement

contained no specific inside information that “had the potential for

further audit consideration beyond what the field team had already

known and had under examination.”

For the 2010–13 audit cycle, STA Castellanoz noted that the team

“had identified and initiated the examination of the . . . issues identified

by the [petitioner] through its initial risk analysis process and standard

auditing procedures without the help of the [petitioner’s] claim

information,” and petitioner’s allegations were “mainly based on public

information.” He further explained that petitioner’s economic analyses

were unhelpful as they were based on unsupportable assumptions,

16

[*16] failed to reference specific controlled transactions, and lacked

comparability analyses.

On March 27, 2020, the WBO issued a final determination letter

denying petitioner’s claim for an award. The letter explained: “The

claim has been denied because IRS identified the issue(s) prior to receipt

of [petitioner’s] information and [petitioner’s] information did not

substantially contribute to the actions taken by the IRS.” The letter

further stated: “The issues [petitioner] identified were already in the

IRS audit plan for [Target], information document requests had been

issued, and there were no changes in the IRS approach to the issue after

review of the information [petitioner] provided.”

Discussion

I.

Summary Judgment in Whistleblower Cases

A.

General Standards

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). Ordinarily, under

Rule 121(a)(2) the Court may grant summary judgment when there is

no genuine dispute as to any material fact and the movant is entitled to

judgment as a matter of law. Sundstrand Corp. v. Commissioner, 98

T.C. 518, 520 (1992), aff’d, 17 F.3d 965 (7th Cir. 1994).

This summary judgment standard, however, is “not generally

apt” when reviewing whistleblower award determinations because, in

such a case, there is no trial on the merits. Van Bemmelen v.

Commissioner, 155 T.C. 64, 78 (2020); see Rule 121(j); Whistleblower

972-17W v. Commissioner, T.C. Memo. 2023-152, at *11. Rather, “[w]e

review the WBO’s determinations for abuse of discretion, generally

confining our review to the administrative record.” Whistleblower

14376-16W v. Commissioner, T.C. Memo. 2024-22, at *27,

supplementing T.C. Memo. 2017-181; see Kasper v. Commissioner, 150

T.C. 8, 20–23 (2018). We do not substitute our judgment for that of the

agency but instead examine whether its determination was “within the

bounds of reasoned decisionmaking.” See Van Bemmelen, 155 T.C. at 72;

see also Whistleblower 972-17W, T.C. Memo. 2023-152, at *12. In

reviewing an appeal of the WBO’s determination, this Court “should

have before it neither more nor less information than the [WBO] had

when it made its determination.” Berenblatt, 160 T.C. at 545–46; see

17

[*17] Estate of Insinga v. Commissioner, 149 F.4th 709, 726 (D.C. Cir.

2025); see also Whistleblower 14376-16W, T.C. Memo. 2024-22, at *27.

B.

Administrative Record

The complete administrative record should contain the

information that the WBO “considered directly or indirectly” in making

its determination. Van Bemmelen, 155 T.C. at 74 (quoting Cape

Hatteras Access Pres. All. v. U.S. Dep’t of Interior, 667 F. Supp. 2d 111,

114 (D.D.C. 2009)). “The WBO is generally presumed to have properly

compiled the administrative record.” Whistleblower 14376-16W, T.C.

Memo. 2024-22, at *27.

To rebut the presumption of a complete administrative record, the

whistleblower must make “‘a substantial showing . . . with clear

evidence’ that documents sought to be included in the record before the

court were in fact considered by the WBO, directly or indirectly, when it

made its decision.” Whistleblower 14376-16W, T.C. Memo. 2024-22,

at *27 (quoting Van Bemmelen, 155 T.C. at 74). “In evaluating the

adequacy of the whistleblower’s showing, we will bear in mind that (as

noted by the U.S. District Court for the District of Columbia) ‘a party

must provide good reason to believe that discovery will uncover evidence

relevant to the Court’s decision to look beyond the [designated] record.’”

Berenblatt, 160 T.C. at 546–47 (quoting Amfac Resorts, L.L.C. v. U.S.

Dep’t of Interior, 143 F. Supp. 2d 7, 12 (D.D.C. 2001)).

At an earlier stage of these proceedings, petitioner moved to

compel the production of documents, seeking discovery of Target’s

2003–18 examination files with an eye to supplementing the

administrative record compiled by the WBO. As petitioner explained,

petitioner viewed the IRS’s complete and unredacted audit exam files

for Target’s 2003–18 audit cycles, including all NOPAs and IDRs, as

necessary to fully evaluate any differences in audit approach that might

be attributable to petitioner’s claim.

This Court denied petitioner’s motion. In our estimation,

petitioner failed to make a significant showing of either bad faith or an

incomplete record. With respect to bad faith, petitioner questioned

multiple aspects of Team 2’s work, including its initial involvement,

conduct of examination, and interaction with the WBO. We concluded

that petitioner failed to satisfy the burden to show something out of the

ordinary, offering speculation rather than a significant showing of bad

faith.

18

[*18] We were similarly unpersuaded that the administrative record

was incomplete. We first explained that the administrative record

contained all information directly considered by the WBO in making its

determination, a point that petitioner did not contest. We then

considered whether the administrative record improperly failed to

include Target’s 2003–18 audit records because they had been indirectly

considered by the WBO. As we explained, the WBO’s determination was

rooted in the Form 11369, the accompanying documentation, and, in the

case of 2010–13, the supplemental material provided in response to the

WBO. The WBO’s determination neither relied upon nor required

Target’s underlying 2003–18 audit records, and we thus denied

petitioner’s motion to compel the production of such documents, as

supplemented.

After our denial of petitioner’s motion to compel, the D.C. Circuit

addressed the scope of the administrative record in a similar context.

See Estate of Insinga v. Commissioner, 149 F.4th at 722–26. The D.C.

Circuit concluded that the administrative record in that case failed to

include evidence that “(i) is material to Mr. Insinga’s award

determinations, (ii) was part of the [WBO’s] history of decision-making

or key stages of the IRS proceedings, and (iii) contradicts the [WBO’s]

conclusion.” Id. at 723. The D.C. Circuit found the record deficient for

omitting information required by regulations, NOPAs that relied on

information provided by Mr. Insinga to build a case against the target

taxpayer, as well as internal emails and audit plans that provided

context as to the state of the examination and the possible role of Mr.

Insinga’s information. Id. at 723–24. As the D.C. Circuit explained, the

“documents omitted by the [WBO] disclose IRS doubts about its ability

to succeed prior to obtaining Mr. Insinga’s information [and thus] were

improperly excluded from a decisional record that centered on the

[WBO’s] claim of investigative self-sufficiency.” Id. at 725. The court

nonetheless cautioned that “[n]one of this is to say that the [WBO] was

required to find every relevant email generated by the IRS during the

investigations.” Id. at 724.

Neither party requested reconsideration of our order in light of

Estate of Insinga. Nor does it compel a different result. Unlike the

whistleblower in Estate of Insinga, petitioner has failed to demonstrate

that the administrative record omits information material to petitioner’s

contribution to IRS proceedings or the WBO’s decisionmaking process.

Petitioner plainly wanted to inspect Target’s audit records in the hopes

of supporting petitioner’s claim. Our role, however, is to review the

propriety of the WBO’s denial based on the administrative record before

19

[*19] it. Nothing suggests that the administrative record lacks

information relevant to the “fair and reasonable assessment of a

whistleblower’s contribution, or non-contribution, to a tax proceeding”

as might frustrate our review. Id. at 726.

II.

Statutory and Regulatory Background

Section 7623(a) authorizes the payment of sums necessary for

“detecting underpayments of tax” or “detecting and bringing to trial and

punishment persons guilty of violating the internal revenue laws or

conniving at the same.” Section 7623(b)(1) provides for mandatory

awards of at least 15% and not more than 30% of the collected proceeds

if all stated requirements are met. See, e.g., Whistleblower 20442-18W

v. Commissioner, T.C. Memo. 2025-86, at *12; Whistleblower 1437616W, T.C. Memo. 2024-22, at *44. An award can be paid only if the IRS

“proceeds with any administrative or judicial action described in

subsection (a) based on information brought to the Secretary’s attention”

and collects money as a result of the action. I.R.C. § 7623(b)(1).

Treasury Regulation § 301.7623-2 fleshes out the statutory

provision. 8 As relevant here, it defines the term “administrative action”

to “mean[] all or a portion of an Internal Revenue Service (IRS) civil or

criminal proceeding against any person that may result in collected

proceeds.” Id. para. (a)(2). In upholding the validity of this definition in

the wake of Loper Bright Enterprises v. Raimondo, 144 S. Ct. 2244

(2024), the D.C. Circuit held that the term “makes the most sense if read

to mean administrative action on the discrete tax issue or issues the

whistleblower’s information identifies.” Lissack v. Commissioner, 125

F.4th 245, 257 (D.C. Cir. 2025), aff’g 157 T.C. 63 (2021).

For its part, Treasury Regulation § 301.7623-2(b)(1) provides that

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

information “substantially contributes to an action against a person

identified by the whistleblower.” The D.C. Circuit again has endorsed

this interpretation, explaining that the “statutory context also makes

clear that an administrative action ‘proceeds based on’ a whistleblower’s

information when that information has substantially contributed to the

IRS’s administrative action and its ultimate recovery.” Lissack v.

Commissioner, 125 F.4th at 257; see also Treas. Reg. § 301.7623-2(b).

Specifically, “[i]n pegging the award amount to the degree of

8 The regulation applies, inter alia, “to claims for award under sections 7623(a)

and 7623(b) that are open as of August 12, 2014.” Treas. Reg. § 301.7623-2(f).

20

[*20] substantiality of the whistleblower’s assistance, the statute

plainly means that all such awards depend on the whistleblower having

contributed in some substantial degree to the [IRS’s] ability to proceed.”

Lissack v. Commissioner, 125 F.4th at 258; see also Estate of Insinga v.

Commissioner, 149 F.4th at 719.

The regulation offers multiple illustrations of this concept. “For

example, the IRS proceeds based on the information provided 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 have

initiated, expanded the scope of, or continued to pursue, but for the

information provided.” Treas. Reg. § 301.7623-2(b)(1). On the other side

of the coin, “[t]he IRS does not proceed based on information when the

IRS analyzes the information provided or investigates a matter raised

by the information provided.” Id.

Treasury Regulation § 301.7623-2(b)(2) offers more detailed

examples, as we had occasion to observe not too long ago. See

Whistleblower 20442-18W, T.C. Memo. 2025-86, at *13. Example 3

hypothesizes a whistleblower who, after the IRS has initiated an

examination, supplies information that “identifies a taxpayer, describes

and documents specific facts relating to the taxpayer’s activities, and,

based on those facts, alleges that the taxpayer owed additional taxes.”

Treas. Reg. § 301.7623-2(b)(2) (ex. 3). According to the example, “the

Exam team uses the information provided to confirm the correctness of

adjustments made based on other information.” Id. The example sees

this information as “merely support[ing] information independently

obtained by the IRS” and thus the examination “is not an administrative

action with which the IRS proceeds based on information provided by

the whistleblower.” Id.

“Example 4 assumes the same initial facts, with a significant

twist.” Whistleblower 20442-18W, T.C. Memo. 2025-86, at *13. In this

scenario “the Exam team identifies inconsistencies between the

information provided by the whistleblower and other information

already in the Exam team’s possession” and then uses the

whistleblower’s information to make additional adjustments that it

would not have made on the basis of information it otherwise possessed.

Treas. Reg. § 301.7623-2(b)(2) (ex. 4). This example concludes that the

whistleblower “substantially contributed to the action” in that instance.

Id.

21

[*21] III.

Analysis

The WBO did not abuse its discretion in denying petitioner’s

claim. In the final determination letter, STA Castellanoz explained that

the IRS had “identified the issue(s) prior to receipt of your information

and your information did not substantially contribute to the actions

taken by the IRS.” He further explained that the “issues [petitioner]

identified were already in the IRS audit plan for [Target], information

document requests had been issued, and there were no changes in the

IRS approach to the issue after the review of the information [petitioner]

provided.” The WBO’s conclusions have ample support for 2003–13, the

periods referenced on petitioner’s Form 211.

A.

2003–07 Audit Cycle

We begin by removing a few years from our consideration. It is

undisputed that the IRS completed the examination into Target’s

2003–07 tax returns in early 2013, before petitioner’s claim was

available to Team 1. Petitioner’s information therefore could not and did

not substantially contribute to an action against Target. See Treas. Reg.

§ 301.7623-2(b). As the IRS did not proceed against Target based on

petitioner’s information, denial of petitioner’s claim as to 2003–07 is well

supported. 9

B.

2008–09 Audit Cycle

We similarly conclude that the WBO did not abuse its discretion

with respect to Target’s 2008 and 2009 tax years. Team 1 opened an

examination of returns for those years in August 2011, more than two

years before petitioner’s claim became available to it on August 20, 2013.

Because of time and resource constraints, the examination was

expressly limited in scope “to recurring and significant issues” identified

during risk analysis that was completed in December 2011 and updated

in November 2012.

As part of the examination, the international examiner issued 65

IDRs solely on international issues (all issued by May 20, 2013), and

Team 1 drafted 30 NOPAs overall on the identified issues for

examination. NOPAs are generally drafted to present proposed

9 The D.C. Circuit recently held that we have jurisdiction to consider the merits

of a denial of a claim filed after the commencement of an audit into a target taxpayer.

See Trongone v. Commissioner, 181 F.4th 85, 90 (D.C. Cir. 2026), rev’g and remanding

Order and Decision, No. 2838-23W (T.C. Oct. 17, 2024).

22

[*22] adjustments to taxpayers only after the relevant issue has been

fully developed. See IRM 4.10.7.5.7 (Jan. 1, 2006). The only transfer

pricing issue that was still live when petitioner’s claim became available

to Team 1, which involved a particular acquisition buy-in payment, had

been (1) identified by October 2011, (2) explicitly referenced in the

midcycle risk analysis of November 2012, and (3) discussed with Target

from January through August 2013. The international examiner in fact

had started drafting the NOPA on this acquisition buy-in payment more

than a month before petitioner’s claim was available to Team 1. Aside

from this one outstanding but developed issue, the Commissioner and

Target had agreed on all other transfer pricing issues by March 2014.

Team 1’s confidential evaluation report and supporting

memorandum confirm that petitioner’s claim did not assist the

examination. Team 1 stated that none of the adjustments during the

examination was related to petitioner’s information, noting that the

examination was expressly limited in scope to issues identified in the

risk analysis, which was “performed prior to the receipt of [petitioner’s]

claim.” In the memorandum Team 1 reviewed the examination work

performed in the two years before petitioner’s claim had become

available, i.e., meeting with Target, drafting of examination plan and

risk analyses, issuing IDRs, drilling down on the acquisition buy-in

payment issue, discussing relevant issues with Target, and beginning to

draft the NOPA. Although the NOPA was not issued until 2015, Team 1

did not suggest that petitioner’s information played any role in the

delay.

Team 1 summarized that potential transfer pricing issues had

been “identified and fully developed and the audit team was in the

process of writing up the NOPA” when petitioner’s claim became

available. According to Team 1, petitioner’s claim was not “utilized” and

did not “assist[] in developing [transfer pricing] issues.”

We see no abuse of discretion in denying petitioner’s claim with

respect to 2008 and 2009 given these findings. The WBO’s conclusion

that the “issues [petitioner] identified were already in the IRS audit plan

for the taxpayer, information document requests had been issued, and

there were no changes in the IRS approach to the issue after the review

of the information [petitioner] provided” was consistent both with

Team 1’s denial recommendation and the information documenting its

work, including risk analyses, the audit plan and timeline, logs for IDRs

and NOPAs, and the international examiner’s activity report.

23

[*23] Similarly apt is the WBO’s observation that “the IRS identified

the issue(s) prior to receipt of [petitioner’s] information and [petitioner’s]

information did not substantially contribute to the actions taken by the

IRS.” All but one transfer pricing issue had been resolved before

petitioner’s claim became available. Although petitioner challenges the

conclusion that the 2008 and 2009 audit cycle was largely complete

when the claim became available, the record makes clear that the sole

outstanding transfer pricing issue at the time petitioner’s claim became

available related to a specific acquisition buy-in payment unmentioned

in petitioner’s claim. Petitioner’s high-level musings about Target’s

potential transfer pricing approach, which did not address the

acquisition buy-in payment at issue, would not substantially contribute

as the WBO concluded.

The governing regulation further weighs in support of the WBO’s

conclusion. Assuming arguendo that Team 1 considered the information

in petitioner’s claim at all (unclear given the limited scope and late stage

of the examination), the record plainly shows that Team 1 “d[id] not rely

on [petitioner’s] information when it ma[de] the adjustments nor d[id]

the information cause [Team 1] to expand the scope of its examination.”

Treas. Reg. § 301.7623-2(b)(2) (ex. 3). Team 1 instead continued to walk

down the same path that it had picked months before the claim had

become available. At best, petitioner’s “information merely support[ed]

information independently obtained by the IRS.”

Id.; see also

Whistleblower 20442-18W, T.C. Memo. 2025-86, at *15. “The regulation

makes clear that a whistleblower’s information does not ‘substantially

contribute[] to an action’ where the exam team simply ‘analyzes the

information provided or investigates a matter raised by the information’

when the matter was already on the exam team’s radar screen.”

Whistleblower 20442-18W, T.C. Memo. 2025-86, at *15–16 (quoting

Treas. Reg. § 301.7623-2(b)(1)).

C.

2010–13 Audit Cycle

Unlike the previous years discussed, Team 2’s audit for Target’s

2010–13 tax years did not start before the receipt of petitioner’s claim.

Despite this difference, we reach the same result as before: the WBO did

not abuse its discretion in concluding that petitioner’s “information did

not substantially contribute to the actions taken by the IRS.”

“In analyzing this question, it is helpful to focus first on the

character of the information [the whistleblower] supplied.”

Whistleblower 20442-18W, T.C. Memo. 2025-86, at *14. The type of

24

[*24] information provided here neatly tracks that described in

Whistleblower 20442-18W. Petitioner had no inside knowledge about

Target or its tax planning and was not involved in the preparation of

Target’s financial or tax returns.

Likewise, “[v]irtually all the

information . . . supplied was derived from publicly available sources,

such as newspaper articles, business journals, and SEC filings.” Id.

Researching this type of public information was nothing notable, but the

first stop in any transfer pricing examination under the Roadmap.

Although petitioner mentions discussions with an advisor and

then in February 2013, Target representatives, there is less than meets

the eye. The advisor with whom petitioner discussed Target’s transfer

pricing did not work for Target but merely had reviewed “how [it] do[es]

[its] allocations.” Target’s advisor moreover did not have “direct access

to the cost sharing calculations” or a full picture of the various

components of Target’s transfer pricing analysis. Their discussions

came in connection with petitioner’s attempts to convince Target to

retain petitioner’s services regarding transfer pricing compliance.

The February 2013 meetings with Target’s representatives, and

the spreadsheet that they gave petitioner, tell a similar story. These

were pitch meetings for the provision of specialized technology to assist

Target’s computation of cost-sharing transactions. By petitioner’s own

telling, Target’s representatives seemed unaware of the facts that

petitioner believed to support petitioner’s case, and the information

provided in a company spreadsheet did not contain source calculations.

In other words, petitioner was not privy to any secret information but

merely used general company representations and reporting to support

petitioner’s theories.

As petitioner acknowledged in the April 2013 debriefing,

petitioner relied solely on SEC filings in concluding that Target had

committed tax violations. Using petitioner’s experience, petitioner was

“able to scrutinize Target’s SEC filings and make an educated guess

about transfer pricing issues that might arise during an IRS audit.” See

id.

“By its nature, high-level information of this sort is unlikely to be

of great use to experienced IRS examiners who are auditing large

multinational companies.”

Id.

Team 2 reached precisely that

conclusion. In 2016 an IRS transfer pricing economist reviewing

petitioner’s claim identified multiple difficulties with petitioner’s

methods rooted in reliance on “too general” public information without

25

[*25] reference to any specific controlled transactions and no basis for

critical assumptions. The Form 11369 further explained that petitioner

had not (1) provided information that “[led] to modifications in the audit

or investigative plan,” (2) “provide[d] information that would not [have]

be[en] obtained [by the IRS] through general audit . . . techniques,”

(3) identified any issues “not common to this type of taxpayer,”

(4) identified any issues “not previously known or well understood by the

Service,” or (5) identified “connections between transactions, or parties

to transactions, that enabled the Service to better understand the tax

implications.”

As further explained in Team 2’s narrative memorandum, the

IRS’s Roadmap, which had been issued in February 2014, guided the

examination. The Roadmap contemplated that before the opening

conference, the examination team would (1) perform research regarding

the taxpayer’s background, history, and core business operations,

(2) consider results and reports from prior audit cycles, and (3) review

the taxpayer’s tax return for controlled transactions. See Roadmap,

supra, at 5–7. The Roadmap further suggested that the examination

team obtain accounting records and any contemporaneous transfer

pricing documentation prepared in compliance with section 6662(e), as

well as hold orientation meetings on financial statements and pricing.

See Roadmap, supra, at 8–10.

Team 2 explained in its memorandum how its risk analysis

process and standard auditing procedures identified various transfer

pricing issues “without the help of [petitioner’s] claim.” Consistent with

the Roadmap’s procedures, Team 2 began by reviewing Target’s SEC

Forms 10-K, Forms 1120, information from previous audit cycles,

merger and acquisition information, segmented financial statements, a

corporate timeline, and section 6662(e) materials that Target supplied.

This preliminary analysis turned up transfer pricing issues of the same

sort identified by petitioner, including that (1) Target generated less

U.S. than foreign revenue; (2) effective tax rates were substantially

lower than the federal statutory rate of 35%; (3) corporate tax return

analysis showed that only 37% to 39% of Target’s worldwide income was

included; (4) corporate tax returns disclosed certain controlled

transactions

involving

intercompany

services,

cost-sharing

arrangements, and platform contribution transactions; and

(5) management services agreements existed among Target and foreign

affiliates.

26

[*26] A review of the section 6662(e) documentation requested as

contemplated by the Roadmap allowed Team 2 to refine its lines of

inquiry, culminating in a November 2015 risk analysis. This risk

analysis identified as issues (1) charges foreign affiliates paid Target for

sales, marketing, general, and administrative services, (2) payments

from foreign affiliates to Target for system operation services, (3) foreign

affiliates’ platform contribution payments under cost-sharing and other

agreements for certain intangible property that Target had acquired,

(4) foreign affiliates’ shares of intangible development costs, and

(5) potential impact on foreign affiliates of a reorganization of certain

entities owned by Target. From this jumping-off point, Team 2 issued

46 IDRs and attended multiple presentations with Target that produced

“detailed and specific [information] providing insights to [Target’s]

operations and transfer pricing for the audit cycle.”

The administrative record includes additional compelling support

for Team 2’s explanation that it had independent knowledge of the

transfer pricing issues petitioner identified. As Team 2 explained to the

WBO: “Naturally, as exam teams from one cycle transition over to the

next cycle and share information, the audit issues and risks for these

[transfer pricing issues] were taken into consideration by subsequent

exam teams.” Although the 2008–09 examination was intentionally

limited to a few issues designated in the risk analysis for those years,

NOPAs from the IRS’s earlier full examinations into 2003–06

demonstrated the IRS’s awareness of issues surrounding the allocation

of costs, including acquisition buy-in payments, marketing, operating,

and general and administrative costs, among Target and its foreign

affiliates under various different agreements.

Petitioner counters that the NOPAs for tax years 2003–06 do not

establish previous discovery of the issues because they related to issues

different from those petitioner raised in the claim. To the contrary, the

NOPAs were replete with discussions of precisely the sort of transfer

pricing issues that petitioner alleged, including proper allocation of costs

for management services, the improper shifting of losses and business

acquisition costs, and the failure to charge arm’s-length prices for

various intangibles related to Target’s business.

We see no abuse of discretion in the WBO’s determination that

petitioner’s claim failed to “substantially contribute to the actions taken

by the IRS” with respect to Target’s 2010–13 tax years. The explanation

offered by Team 2 that it relied on independent sources and not

petitioner’s claim is consistent with the documents in the administrative

27

[*27] record. It is also consistent with Treasury Regulation § 301.76232(b)(1), which offers as examples of substantial contributions

information that causes the IRS to initiate a new action or expand the

scope of an ongoing action. The WBO did not overstep its bounds in

crediting Team 2’s explanation and denying the claim.

IV.

Petitioner’s Arguments

Petitioner challenges these conclusions on a variety of fronts. 10

First, petitioner asserts that the WBO “prematurely denied petitioner’s

claim with respect to [the 2014–18] tax years.” As evidenced by the

WBO’s confidential evaluation reports, the determination at issue did

not purport to resolve any claim for those years, and petitioner is free to

file such a claim for consideration by the WBO.

To the extent that petitioner thinks that the supplements in

support of Form 211 constitute a claim with respect to Target’s 2014–18

tax years, we disagree. By way of review, petitioner sought to bolster

and expand upon the original Form 211 by means of supplemental

economic and regulatory analyses sent mostly during 2013 and 2014,

with two more supplements of the same sort transmitted in April and

December of 2015. Unsurprisingly, the WBO forwarded these analyses

to Team 1, which was responsible for the examination into Target’s 2008

and 2009 tax returns and had received the original Form 211. After the

case had been transferred to Team 2, an IRS economist explicitly

considered and rejected the analyses offered in Form 211 and the 2015

supplements. Unlike in Trongone v. Commissioner, 181 F.4th at 91, the

record does not address how the IRS considered petitioner’s information

with respect to Target’s 2014 through 2018 tax years, much less reflect

any determination by the WBO that might confer jurisdiction on this

Court.

10 Petitioner’s response to the motion for summary judgment was filed during

the pendency of his motion to compel discovery, and petitioner argued, inter alia, that

summary judgment was inappropriate given the purportedly incomplete

administrative record. Specifically, petitioner argued that the record was inadequate

as it failed to include all case files and audit exam files for 2003 through 2018 and the

administrative record had been redacted. As noted in our order denying the motion to

compel, the Commissioner removed all but one of the redactions based on section 6103

and refiled the administrative record with a privilege log describing the nature of the

remaining redactions. Petitioner raised no further objections on that score, and we

determined petitioner received all the relief to which petitioner was entitled. As

explained supra Part I.B., the administrative record as filed is complete.

28

[*28] Second, petitioner contends that the administrative record does

not support summary judgment. As to 2008–09, petitioner asserts that

the IRS “had not identified the whistleblower-reported tax violations”

before petitioner’s claim was available. As explained before, this was an

examination with a focus limited to a few designated issues. The

administrative record establishes that only one transfer pricing issue

was still live when petitioner’s claim became available and that transfer

pricing issue, involving a particular acquisition buy-in payment, had

been studied for months and was outside the scope of petitioner’s

assertions. The fact that the examination continued with respect to

other non-transfer-pricing issues is of no moment, as petitioner’s

allegations related only to transfer pricing. We conclude that the WBO’s

conclusion has the support of the administrative record.

As to the 2010–13 audit cycle, petitioner contends that the record

suggests that Team 2 used petitioner’s information because the

information was on hand and adjustments were made related to

petitioner’s allegations. The fact that adjustments might be related to

petitioner’s allegations, however, does not mean that the adjustments

are attributable to the allegations. See Whistleblower 20442-18W, T.C.

Memo. 2025-86, at *18. The record fully supports Team 2’s explanation

that its own preliminary examination following the Roadmap identified

the issues independent of petitioner’s claim and that the development of

these issues stemmed from Target meetings and IDRs, not petitioner’s

high-level assertions backed by unreasonable assumptions. We see

nothing to gainsay the WBO’s conclusion.

Third, petitioner claims that the WBO issued a “false or

incomplete denial letter,” asserting that the WBO’s conclusion that

petitioner failed to “substantially contribute to the actions taken by the

IRS” did not explain “what petitioner failed to do.” The denial letter

here accurately summarizes the conclusion reached by STA Castellanoz

in his award recommendation memorandum. According to STA

Castellanoz: “The whistleblower information was not utilized in . . .

developing [transfer pricing] issues as part of the 2008–2009 audit

cycle.” As to 2010–13, he explained that “Exam concluded that

[petitioner’s] claim did not provide any value,” specifying that Team 2

had identified issues in its preliminary risk analysis and that the IRS

had been aware of the issues that petitioner identified because of its

examination of such issues in 2003–06. He continued that petitioner’s

allegations were too general and unsupportable, while petitioner’s

economic analyses “were based on unsupportable assumptions, [and]

made no reference to specific controlled transactions or lack of

29

[*29] comparability analyses.” These explanations, built on the WBO’s

detailed review of the case file, make clear what petitioner failed to do. 11

See Whistleblower 20442-18W, T.C. Memo. 2025-86, at *17–18.

Finally, petitioner alleges that the WBO’s denial was an abuse of

discretion. Petitioner objects that Team 2 incorrectly characterized

petitioner’s claim and contributions in the Form 11369 and its denial

recommendation. Specifically, petitioner contends that the Form 11369

fails to reflect that Team 2 actually used petitioner’s information, and

Team 2’s denial recommendation incorrectly suggested that petitioner

relied only on public information, which was not an adequate ground for

denial in any event.

We see no abuse of discretion in either regard. With respect to

Form 11369, Team 2 stated that it did not rely in any respect on

petitioner’s claim, a statement consistent with its answer on the Form.

As we have detailed, this position has significant support in the

administrative record. The WBO thus did not abuse its discretion in

crediting Team 2’s explanation. Likewise, although Team 2 pointed out

that petitioner relied “mainly” on public information, its recommended

denial was not for that reason. To the contrary, it stated that

petitioner’s “information . . . contributed neither to Exam’s gathering of

facts nor the development of issues for 2010–2013 audit cycle,” in light

of the IRS’s previous knowledge of the issues, Team 2’s further

identification of the issues using the Roadmap, and its development of

11 In a related vein petitioner contends that the WBO abused its discretion by

failing to follow the IRM—specifically IRM 25.2.1.5.1(1) (May 28, 2020), 25.2.1.5.5(4)

(May 28, 2020)—in considering its claim. Petitioner asserts that (1) the IRS failed to

properly place markers designating a whistleblower claim on the audits for 2003–07

and 2014–18, and (2) the Form 11369 and attached narrative memorandum failed to

explain “what was known/what issues were identified prior to receiving [petitioner’s]

information.” As an initial matter, the provisions on which petitioner relies were

issued after the determination letter here. Moreover, “it is ‘well-settled’ that IRM

provisions are ‘directory rather than mandatory, are not codified regulations, and

clearly do not have the force and effect of law.’” Whistleblower 14376-16W, T.C. Memo.

2024-22, at *31 n.21 (quoting Marks v. Commissioner, 947 F.2d 983, 986 n.1 (D.C. Cir.

1991), aff’g per curiam T.C. Memo. 1989-575), supplementing T.C. Memo. 2017-181;

accord Weiss v. Commissioner, 147 T.C. 179, 196 (2016) (“The IRM lacks the force of

law and does not create rights for taxpayers.”), aff’d, No. 16-1407, 2018 WL 2759389

(D.C. Cir. May 22, 2018). In any event the audit of Target’s 2003–07 tax returns was

closed before petitioner’s claim became available, and as explained above, the WBO

has made no determination as to the latter years. And the relevant documents clearly

indicate “what was known [and] what issues were identified” by the exam teams before

receiving petitioner’s information.

30

[*30] issues through IDRs and meetings. Again, the WBO did not abuse

its discretion in finding this explanation credible.

To reflect the foregoing,

An appropriate order and decision will be entered.