# UNITED STATES«TAX COURT

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## Record

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

## Text

137 T C. No.

15

UNITED STATES«TAX COURT

WHI£TLEBLOWER 14106-10W, Petition r v.
COMMISE IONER OF INTERNAL REVENUE, Respondent

Docket No. 14106-10W.

.

Filed December 8, 2011.

a fo Emer senior execütive
X,
iled d claiÈfor a
whistleblowe: award under sec . . 7623 (b) , I . R . C. , alleging
that X had u:2derpaid ïts taxes . R inÜesÙigated P' s claim
but, did not open an administrative or judicial proceeding
against X and did not collect any additional tax from X on
thei basis of P s information. R denied P's claim on the
basis that an award determination could not be made under
sec. 7623(b), I.R.C.
P's ide2tity thus far has been kept confidential.
Asserting that disclosing P's identity in this judicial
proceeding would result in retaliation and professional
ostracism, P filed a motion for a protective order,
requestîng t 2at the record be sealed or alternatively
that P be grinted anonymity. .
While P's motion for a protect.ive oËder wa
pending, R f Lled a motion for summary judgment. P
opposes R' s notion on the grounds that it is premature
because P s notion for a protectivegorder is pending
and discovery has not commenced.
.

$$VED OEC - 8 201

Held: Summary judgment may properly be rendered even
though a.motion for a protective order is pending and
discovery has not commenced. Held, further, because P
failed to meet the thre¼hold requirements for a
whistleblower award, R' s motion for summary judgment will be
granted. Held, further] because the potential harm from
disclosing P's identity§as a confidential informant
outweighs the public interest in knowing P' s identity in
this case decided on summary judgment, P' s request for
anonymity will be grantèd. Held, further, the parties will
be ordered to redact from the record both P's and X's names
and any identifying information about P and X. Held,
further, because. granting P's request for ánonymity and
redacting identifying i formation adequately protect P's legitimate privacy interests as a confidential informant,
P's request to seal the record will be denied.

,' for petitioner.
David A

Ingold an

Rutl Mary Spadaro,

042for
respondent

OPINION

TI RNTON, Judge:

This

s an action pursuant to section

7623 (b) (4) to review respondent' s denial of pétitibber' s älaim
for a whistleblower award.

his matter is*befo e the Court. on

respondent's motion for summ ry judgment and petitioner's motion
to seal the rècord and proceed anonymouslý.

1The name of petitioner
counsel has been omitted in
furtherance of protecting pet itionef's identity.
2Unless otherwise noted,4 all section referenceä are to the
Internal. Reve ue Code, as amÊnded, and all Rule references are to
the Tax Court Rules of Practice and Procedure .

- 3 Background
Petitioner' s. Whistleblower Claim
n

On March. 3, 2008, petitioner-submitted. to the Internal: -

Revenue'Service Whistleblower Office (Whistleblower Office) «Form
211, Application for'Award for' Original Information:

This

submission indice ted that 'while employed as a senior executive in
a particular company (X) , petitioner had become aware of a tax
code violation that resulted in X' s underpaying its Fe^deral
income tax by 'a substintial; amount. ' By letter dated Mar'ch 11', 2008,. -resporident a~cknowledged receipt of pe~titionér' s claim.
After various written communications'between *the parties, by
lett'er to petitibner date-d M'arch 13, '2010) the 'Whistlebl#ower

Office adv©ised that petitioner did not qualify for a¯n award
because the subm3 tted information did not identify a Federal tax

issue upon which the Internal- Revenue Service (IRS)~ would take
action ånd therefore did'not lead to the ^detection of> an
underpayment of tax for which' an- award could be made" under
section 7623 (b) .^

Petitioner 'timely' petitioned thi^s Court

pursuant"to sedtnon 7623 (b) (4) .
Petitioner's Mot: on for a' Protedt^ive 'Order

-

'

'

Petitioner ¿tlso filed, along ^with the petitiori, a motion to
seal identity,icaise, and- accóm'panying' dócuttients (som'etimes'-

·

referred to here:.nafter as petitioner's motion for a protective
order) .

The Court; temporarily sealed the record and, af,ter

.

.

receiving respondent 's respo se and petitioner' s supplements to
the motion, held a hearing on petitioner's motion.

At theï

hearing petitioner's counsel clarified that petitioner= sóught. to
have the record sealed or, alternatively, sought-permission to
proceed anonymously .

Petitiðner submitted an af f idavit alleging

the ;basis in support of the motion to seal or proceed
anonymous ly .
According to the affida it,'-while employed at X, petitioner

became aware3 of| the alleged tax underpayment referenced in
petitioner's,application for a whistleblower.award.

Petitioner

submitted the whistleblower claim to the IRS. . Petitioner'is ,
identity as a whistleblower 1as been kept confidential throughout
the administrative proceedings and thus far in this judicial_ :

action.
At some point after filing the whistleblower claim,
petitioner obtained new semplòyment.,in a company other than X. According to the affidavit petitioner fears "economic and
professional ostracism, harm, and job-related harassment if my

identity is revealed because my new employer and other potentiial
employers will not .want to hi e or employ a known tax
whistleblower."

Petitioner a so asserts that -X may suffer

financia:11y if the details ,of petitioner's claim are .made public.

3Withóut objection, petit ioner's affidavit was received into
evidence as petitioner's testimony.

- 5 Respondent's Mot.ton for Summary Judgment
On June 6, 2011, while petitioner's;motionjfor a protective
order was still pending, respondent filed×a.motion for summary
judgment.

On July 6, .2011, petitioner filed an;opposition to the

granting of respöndent' s smot'ion for summary judgment

Neither

party has request.ed a hearing o&respondent s motion fore summary
judgment, and we conclude that none is necessary.
,
I.

Background:

Discussion

e

Judicial Review of Tax Whistleblower Claims

Since 1867 t he Secretary has had legal .authority to make
discretionary payments for information .that 'aids in detecting tax

underpayments and fraud.

See History òf the

042

Whistleblower/ Inf ormant Program, ht tþ:>//www . irs . gov/ compliarice/
article/0, , id=18 294, 00 . html .

In 2006 Congress substantially

amended the whist leblówer proIgr'am by enacting sect-ion -7623 (b) .
Under this provi ion, "If the Secretafy proceeds *ith any
administrative or judicial action" on the basis of information

provided .by a wh stleblower, then, subject to various conditions,
the whistleblower shall be entïtled to an award o

l 540
. to 30

4The pre-2006 version of the tax whistleblower .law, former
sec. 7623, survives with minor changes às sec. 7623f(a)

percent of -the collected pro$eeds .5

Sec . 7623 (b) ; see also

Cooper v. . Commissioner,

73

135 T . C. 70,

(2010) . _

Before .2006 there was.no express statutory provision for

judicial review of tak whist eblower claims . . See Colman v}
United States, 96eFed. Cl. 633,^,638

(2011). (stating that the pre-

2006 tax whistleblower law "Èannot serve as the substantive law

on which to predicate" jurisdiction of the,Court of; Federal
Claims) .'
7623 (b) (4)

This situation cha ged with the enactment of section
which provides tlfat t he Tax Court shall have

urisdiction with respect , to tany determination
under isebtión, 7623 (b) (1)t,
States,

82 Fed. Cl.

549,

(2) , or (3)..
553 555

(2008)

042regarding.
·an eaward

-See DaCosta v

Uni'ted

(holding that claims

under section 7623 (b) are within the exclusive jurisdiction of
the Tax . Cöurt) .

This Court

as held that pursuant to section

7623 (b) (4) a letter from the Whistleblower Office, denying a claim
on the grounds that no award determination could be mmade under

$To quálify for an award under sec. 7623 (b), the tax,
penalt~ies, interest, additions to tax, and additional amounts in
dispute must exceed $2 millicn., Sec. 7623 (b) (5) (B) .
Additionafly,' if the subject Ê>f the Ñhistleblower claim is an
individual, the subject's gross income must exceed $200,000 for
the year at issue .

Sec .

7623 (b) (5) (A) .

Judicial review of claims arising under the pre-2006 ,
version of sec. 7623 has been confined to contractual claims
brought under 'the Tucker Act,(28 U.S.C. sec.

1491(a) (1)

(2000 &

Supp. 2005), in limited circumstances where the informant and the

IRS had entered into a binding agreement by negotiating and
fixing a specific amount for á whistleblower award. See, e.g.,
Merrick v. United. States, 846 F.2d 725,- 726 (Fed. Cir. 1988);
Colman v. United_States, 96 F d. Cl. 633, 637-638 ,(2011) .

section 7623 (b)

onstitutes andetermïnation conferring

jurisdictioncon

hisnCourt.

II.

Respondent

Motion for Summary Judgment

we may grant

summary s judgment i f there i s eno +genuine i s sue

Cooper v. Commissioner, supra at. 73.

as to any material fact and acdecision may =be rendered as a
matter of . law.

Rule 121 (b) ;- see Sundstrand Corp. v.

Commissioner, 98.,TeC
Cir .

518, 520

(1992)e, affd. 17 F.3d 965

1994) ; Zaent.zrv: Commissioner,. 90 T . C. 753,

754

(7th

(1988) .

The

movi-ng party hears othe burden-of proving -that ithere is no sgenuine

issue of omaterial vfact, and factual inferences wilbbe read in a
manner most favorable ,to sthe ;party opposing summary judgment .
Dahlstrom v. "Com tissi~oner,

85oT:C: 8127; 821

Commi'ssioner, L79 T;.C.434.0;c 344

(1982)r.'

(1985) ; Jacklin v.

When a motion for summary

judgment is made and properly . supported, the adverse party may
not rest upon mere allegations. or denials of the. pleadings but

must set forth -specific ifacts :showing that; there is a genuine
issue for trial.

Rule 121(d) . _ If. the adverse party does not- so

respond, t hen .a decision. may be entered against asuch party.

Id.

Respondent; asserts ethat he is entitled- to summary judgment
because petitioner does not meet theï threshold requirements for
an award under section 7623 (.b) .

Along with his motion foru

summarycjudgment respondent efi^led the affidavit of- Chief Counsel

Attorney sDavid ~A iIngold, declaring, on the; basis .of his review
of respondent' s administrative and. legaluf ileszand xon the' basis

of conversations swith relevant IRS personnel, that the
information petitioner provided resulted in respondent's taking
no administrative or judicial action against X or collecting from

X any amounts of tax, intere

541t,
or penalty.

Petitioner's opposition3does not address the substantive
merits of respondent's motion for summary judgment but suggests
that respondent's motion is premature because petitioner's·motion
for a protective order is stïll pending and because formal"
discovery has not yet commended.

We disagree that respondent's

motion.for siimmary judgment is premature.

Dursuant -to Rule

121(a) a party may move for summary judgment "at any time

commencing 30 days after the pleadings are closed but within such
time as not to delay the trial."
the Court may grant summary

And pursuant to Rule 121(b),

udgment if the pleadings, answers to

interrogatories, depositions, admissions, and other acceptable
materials, together with the affidavits, if any, show that -there

is. no genuine .issue as to any material fact and that a decision
may be rendered as a matter of law.

The pendency of petitioner's

motion for a protective order is immaterial to respondent's
filing or the Court's ruling

pon the motion for summary

judgment.

Contrary to Rule 121(d), petitioner's opposition does not

set forth, by affidavits or otherwise, any specific facts showing
that there is a genuine issue for trial.

Nor, pursuant to Rule

121(e), has,peti ioner otherdise made tany shöwincl t 540liat
tlie facts'
set f orths in ^Mr .

ngold' s af fidavit afe genifinelý. di'sput'ed

Rule il21(e) is" modeled in 'largedpart aft'erj formëf rule 5

f)

of ^the Federal Rules of Civil Procedure (rede¼i§hatled rûle 56 (d)
.nL2009 wit-h nönaubstäntive changes) .

In Kéebléf Co. v

Bakery Prods.,

1989),

856 F.2d 1386 -(Fed".1Cir

rule 56(È), the

characterized;th

pplyin) förine

ourt held thät?the þlaint iff coul'd no

summary judgment by keqüestingtdiácovery.
plaintiff

MuÈray

he

ic

oûzt

opposition»as sayingi in effect

we have .ncF fact al basis for opposing summãéyijüdgnient; buta if

you staysproceed ngs, vwe mightifind somethin
The court sobserved:

"

I_d2 at 1389

"If allSone 'had to do to óbtáifi

cjrant of

Rule 56 (f) motio

wère t o¾llege Jossés ion9by mö ant of

inf ormat ion'gnd

othe r evidencie

Rule 121(e) provides

eve r

uninîä

ùdgt

ce t

nt

.

P

When Affidayit Are Unava lable
If it appears from
the affidavi.ts of a pai-ty opposing the motion [for
summary ^judgment] thãt such ,party cannot för reasons
stated present by affidavit. facts essential to justify
such party' Lopposition, then3the Court mahdengthe
motion .or may of-der a continuánce to
rmit affidavits
to be obtained or other ste s to be takenaar may'make
sùch.otiher order as is just.
If ît appears from the
÷affidavits f a»party opposing the ,motiondhat such
pårty' s on17 legally available method of contravening
the facts s t forth, in- the supporting affij:lavits ofvthe
moviÛ part
s t-hrough cro©ss -examination bf such
affiants: or the testimony of third partiestfrom whom
affidavìts annot be s cifred, then such a·showing may
beideemed sîfficient to establish that,the facts set
e
forth in such supporting affidavits are genuinely
disputed.

n

- 10 decision would hav:e to be delayed while the non-movant goes
fishing in the movant's files."

Id.

For similar reasons,

summary judgment for respondant. is not inappropriate simply
because petitioner has not commenced discovery.
On the substantive meritis of respondent's motion for summary
judgment, Cooper v. Commissioner, 136 T.C. .597 (2011), is
controlling.

In that case, decided after respondent moved for

summary judgment in the case before us, this Court held in
closely analogous circumstances that the Commissioner was
entitleci to summary judgment
section 7623 (b) (1)

As this Court stated, under

"a whistléblower award is . dependent upon both

the initiation of an administirative or judicial action and

collection of tax proceeds.

at 600.

"If the Secretary does

not proceed, there can be no whistleblower award."

Id. at 601.

According to the affidavit filed in support of respondent's
motion for summary judgment,
have not been met.

hese preconditions for an award

Consequently, we shall grant respondent's

motion for summary judgment.

III.

Petitioner's Motion for a Protective Order
Although we have held that respondent is entitled to summary

judgment, we still'need to rule on petitioner's motion for a
protective order, since our ruling will af fect any further

proceedings in this case and will govern future public access to
information in the record.

Pêtitioner's request to seal the

_ 11 -

record orfalterratively lt'o ];>róceed anonymously pÊesents novel
issues of balancing "the public s interests in open court
proceedings againsti pe^tit±íoner's privacy inte

sts-as a

conf ident tal inf ormant .
A.

Openness of Court Proceedings

This countî

has a lòng traditioh of ope

. access to courtdecords .

rials anÈ public

This* tra litiòrr is emi ddàd in the

common law, theOtätutory laid and the U.S. CÂnstitution.
Nixondv. Warner Commcnsï

Inc.', *435 U.S. 589,

5 7

See

(1978);

Washington Legal iound. i. U S. Sentènding Comäri , 89 F.3d 897,
902

(D. C

Cir .

1996) ; *Willie 1\Telson Ñusi

T . C. 914, 9·17 (1985) .*

Co

Comm s ione ,

Open tfials' and' publi

access to court

records prosote Táirness and thé seàrch fòr t

5

t h, help enlighten

public"opinion, ind désure co'nfidence in the j diciel^ proc ss.
See i Richinond Newspapers , luc . Ý. Virginia
(1980)v;1Gannett Co.

(1979)

Inc. v. D Êasqilal

But'.the fight tö acbess judici

448 U. S . 555,
443 U.

.

68, 383

reNö ds

has neve

-5 5

beeh

8The Supreme Court has ,held that there is a guaranteed right
of the public under the First Amendment to attend criminal
trials see.Richmond Newspapers, Inc. v. Virginia, 448 U S. 555
(1980) , but has not expressly ruled on whether there is a First
Amendment(right; ofcaccess toscivil proceedings and documents.
The Courts of Appeals that have addressed the issue agree that
there is such a constitutional,right
See, e.g., Lugosch
Pyramld Co. of Onondaga, 435 F.3d 110, 124-127 (2d Cir. 2006);
Rushford v. New -Ybrker .Magazïne, Inc. , 846 F.t2d 2497 ^253 (4th
Clr . 1988) ; Publibker Indus . , Inc . v. Cohen, 733: F . 2d 1059, 1067 1070 (3d Cir. 1981;) ; In re Contl
Ill Sec. Litig. , 732 F 2d

1302, 1308 (7th Cir. 1984); Brown & Williamson Tobacco Corp.. v.
FTC,

710 F.2d 1163,

1178-1179

(6th Cir. 1983) .

- 12 -

considered absolute.

To the contrary, courts always have

asserted the power to seal t eir records when deemed necessary."
United States v. Mitchell,

5 540l
F.2d 1252·,

1260

(D.C. Cir. 1976)

revd. on other grounds sub n m. Nixon v. Warner Commcns., AInc.,
supra.
Consistent with these pfinciples, section 7,458 provides that
hearings before the Tax Court shall be open to the public.

And

section 7461(a) provides generally that all reports of the Tax
Court and all evidence recei ed by the Tax Court shall be
records open to the inspection of the public.

ublic

But the Tax Court

is authorized to "make any p ovision which is necessary to
prevent the disclosure of tr de secrets or other confidential
information, including a pro ision that any document or
information be placed under s al to be opened only as directed, by
the Court . "

Sec. ,7461(b) (1) .

Under Rule 103(a), upon motion by

a party or any other affected person and for good cause shown,
the Court may make any order which justice requires to protect a
party or other person from arinoyance,. embarrassment, oppression,
or undue burden or expense, including but not limited to ah order
that a trade secret or other information not be disclosed år be
disclosed on1y in a designated way.

Hence, this Court, like

other courts, has broad discretionary authority to control and
seal, if necessary, records and files in its possession.

See

Anonymous v. Comm1ssloner, 127.T.C. 89,. 91 (2006); Willie Nelsðn

- 13 Music9Co. v: Com issioner,1supra at 920.

In additiòn, where

appropriate, thin Court may permit a petitioner to proceed
anonymously.

Anonymous v. Conimissioner, supra at 91.

Section 762

does not expressly address privacy interests of

tax whistleblowe3 s or other affected persons.

When it

promulgated Title XXXIII of its Rules of Practice and Procedure,
relating to tax whistleblower actions, this Court observed that
in appropriate cases it might permit a petitioner to proceed
anonymously and rtight seal the record in that case.
Note to Rule 340

130 T.C.

586.

Explanatory

The Court stated that it

contemplated that
generally applicable statutory provisions Rule 103 and
related caselaw while *they do not require the Court s
records * * * to be sealed or require the Court to permit
all petitioners in those cases to7proceed nonymously,* do
provide authority for the Court to allow a petitioner to

In,2007. the Senate passed a bill with this provisi n that
would have authorised the Tax Court in new sec.

7623 (b) (4) (B) to

seal portions, of the record in tax whistleblower cases:
PUBLICITY OF APPEALS--Notwithstanding sections 7458 and

7461, the Té.x Court may,. in order to preserve the
anonymity, privacy, oriconfidentiálity of any person
under this dubsection,9 provide by rules 'adopted under
section 745T that portions of filings, hesrings,
testimony, evidence,7 and reports in connection with
proceedings'under this»subsection may be closed to the
public or ir spectiori by the±public.
[U.S. Troop
Readiness, Veterans' Health, *and Iran Accbuntability
Act, 2007) K.R. 1591, 110th Cong.,
passed by Senate, Mar. 29, 2007) .

sec. 543 (c)

(as

This proviäionk which ultimat~ely was nöt enacted,. is
substantially id ntical to sec. 6110 (f) (6) . See infra note 11.

proceed anonymously and to seal the 'record when appropriate
in whistleblower actions.
[Id.]
.
B.

Considering the Les

Petitioner has requeste

Drast ic Option First

in the first instance that we seal

the: record and, alternativel , that we permit petitioner to
proceed anonymously.

Before granting a request to seal the

record, however, it is appro riate to consider the less dfastic
option of permitting the requesting party to proceed
anonymously.1°

Stone v. Univi of Md. Med. Sys. Corp. , 855 F.2d

178, 181 (4th Cir. 1988); see Johnson v. Greater Se. Cmtv. Hosp.
Corp.,

951 F.2d 1268,

1278

(I5.C. Cir.

1991)

(stating that if the

trial court determines that some type of sealing order is

warranted, it should be "no broader than is necessary to protect

those specific interests iderîtified as in need of protectibn") ;
In re N.Y. Times Co.,

585 F. Supp. 2d 83,

91

(D.D.C. 2008)

(concluding that protecting an informant's identity. did not
require sealing of documents but could be accomplished thrbugh
the redaction of the informarit's name) .

Permitting a litï ant to

1°The Judicial Conferenc of the United States has recently
adopted a national policy that encourages Federal courts tþ seal

.
042

entire civil case files only when sealing is "required by htatute
or rule or justified by a showing of extraordinary circumstances
and the absence of narrower feasible and effective alternatives
such as sealing discrete docuinents or redacting informatioh, ÷so
that sealing. an entire case f ile is a last resort . " News
Release, Administrative Office of the U.S. Courts, Conference
Approves Standards & Procedurés for Sealing Civil - Cases (Sept .
13, 2011), available. at http://www.uscourts.gov/News/NewsView/1109-13/Conference_Approves_Standards_Procedures_For_Sealingj_Civil_
Cases.aspx.

.. 15 -

proceed anonymot sly, unlike sealing the record, presèrves in
large measure tl e pubiic''s abili y tÊ s$rÈtidize

üdiciai

functioning sihce "Party anonymity does not obstruct th^e public's
view of the issues joined or bh'e court's performance in resolving
them."

C.

Doe v. Stegall>

653

.2d i80,

18s

(Éth Cir.

Petitioner's Request. for Anonymity
13

1Si81) .'

.

Ge1eral Colfsidera'tions

"A party may generally proceed anonymously when the trial
court reasonably determines 4that the need for anonymity^ outweighs
the prejudice to the "opþósing party Ånd the gefleraÉ p 570esumption
that the partie

identities ar'e public informahl

v. Commissioner

supra at 94 i

(4 th Cir .

Anonymous

The decision whéÊher Êo allow a

party to prodeed anoùymoùsly rests w
the trial cöurt.

."

hin the souncÍ dis retion of

Id. ; see James v. Jacobson, 6 F.'3d 233, 2 5408

1993) ; see al so sec .

7461 (b) (1) .

In raret instancès this Court has permitted taxpayers in
deficiency 'cases to proceed anohytàÊusly upon finding "that the
need for anonymit 570
outweighed prejudi e to thei op osing barty and

the genéï-al presumption that th
informatìon."

parties

identitie

are public

See Anonymous v. Commissióner, supra at 94;

Under Rule 227, promulgated pursuant to sec. 6110 (f) (3)
petitioners 'and intervenór may also proceed anonymopsly, if
appropriate, in disclosure actions in the Tax Court. See, e.g
Anonymous~v." Òommi.ssioner, 1$4 T.C. 13 (2010)
The. records in
disclosure action are^genefally sealed pursuant to Rule 228,
promulgated pursu nt to sec . 6110 (f) (6) .

-·

16

-

Anonymous v. Commissioner, T.C. Memo. 2010-87.

.In these ¼

deficiency cases the taxpaye s demonstrated risks of severe
physical harm if their identities were revealed.
.

No court has

previously .considered the ci cumstances under which tax
whistleblower suits under se tion 7623 (b) may be prosecuted
anonymously.

Consequently,

e shall consider in some detèil the

various factors that courts have applied in determining whether
litigation should proceed anónymously or pseudonymously..
Seven Courts of Appeals have adopted or endorsed multifactor

tests to govern the trial co rt's exercise of discretion i
determining whether litigati n should be permitted to proceed
anonymously or pseudonymousl .

See Lozano v. City . of Hazleton,

620 F.3d 170, 195 (3d Cir. 2 10), vacated and remanded on öther
grounds 563 U. S . _,
Sealed Defendant,
Porter,

131 S .

(2011) ; Sealed Plaintif f v.

537 F.3d 1 5,,190-191

370 F.3d 558,

560

Advanced Textile Corp. ,
. v. Zavaras,

t . 2958

(6t h Cir. 2004); Does I Thru XXIII v.

214 F. 3d 1058,

139 F.3d 798,

(2d Cir. 2008); Doé v.

1068

(9th Cir. . 20009) ; M. M.

803

(10th Cir.. 1998); James v.

Jacobson, supra at 238; Doe v

Frank, 951 F.2d 320, 323

Cir. 1992) ; Doe v. Stegall,
v. Commissioner,

(lilth

upra at 184-186; see also Anonymous

127 T.C. .at 94.12

12Any appeal of this cas would likely lie with the Court of
Appeals for the D.C. Circuit. See sec. 7482 (b) (1) (flush 3
language). That court, like the Supreme Court, has not expressly
addressed the propriety of ps udonymous or anonymous litigãtion,
(continüed2 . . )

- 17 -

Relatively cecently, the ..Conrt of Appeals t for the Secbnd

Circuit canvasse Alve ska -Pipeline

151 F.R.D. 478

(D.D.C. 1993).

Writing for' the court,

Judge Sp,orkin described the risks of retaliation that
whistleblowers 'face:

-

The case law, academic studies, and newspaper accounts
well document . the kindnof- treatmentythat sis,usually
visited upon public and private employees who speak out
as a matter of conscience pn issuesmof jpublhic conóern.
Fór example, a six-year study on whistleblowers by
Myron Peretz Glazer and ;Penina Migda,Glazeiradetairy
provision.

See 31 U. S. C. sec. 3730 (1É) .

States have enacted statutes

Moreover, almost a 1 the

rotecting employees in the public

and/or private sectors who rep rt iZlegal conduct .
at 557.

Wofil, s0pra

In stark .contrast, sebtiori 7623 contains no

antire taliatory provisions .
It is the IRS' stated policy to treat tax whistleblowe s as
confidential informants.

The Internal Revenue Mantial (IRM)

sta es:

"To phe extent that the JIRS WhistlèbloiveÑOffi

de erm nes·tShat qn individual.i;sga

histleblower' under

C

section 7623, such individual isl-ialT be deemed to be a
confidential informant whöse identitiyLshalTbe protected in
accordance with ::RCssectionò6103s(h) (4)
(CCH) , pt .. 25 . 2 . Q. 11,3 at 223 217

6 Administratio , IRM

(June 18,

regulations undergsection 7623 state:

2010) .

No?ünauthoi-ized pefson

will be a vised cf2the identity oflanvìñformant
042

1(e), Proced. & Admin. Regs.

The

Sec. 3Ó . 625-

In Óublished suidÄndë*tó the pu lic

on .how to f[ile tax whi>stleblower claims, the IRS states tlÉat
"will p otect the identity of the cla*ima t to the fulfest extent
permitted by law."

Notice 2008-4,

sec 3.06, 2008-1 C.B. 253

255.2s

2

Anal.ysis of Petitioner's Request for Ånon 570m
t

In deciding v13ether petitióner shotil& be allówed to proceed

anonymously, we,takesinto accoánt0notionlÿ'ÒetitiÒner s
legitimate p ivagy interests asca corifidentìàl. íriformaht, bu
also the .nature gand severity of1theveyéci!fiö harÈ ass rt d to

arise fyom discloning petitioner s identït:y,

nd wÊ balanbe th t

potential7 harm againstvthe relevanthsociål -intérest s .

See,

.

.,

2'This'nòtice ÊÌsÈ stht es I tt in ome circumstances, such
as when the claimint is needed as a vitness in a±judicial
proceeding, it*may 1$e rie'cessary to reveal the claimant's identity
but tha,t the IR vill make "every effort"e.tosinform' the claiman
beforeyproceediñg in such a^.case. Notice 2008-4, sec 3.06, 20081 C.B... 253, 255.

- 34 -

Sealed Plaintiff v. Sealed D fëndant, 53'7 F.3d at 190-191; Does I

Thru XXIII v. Advanced Textile Corp., 214 F.3d at 1068; Wolfchild
v. United States, 62 Fed. Cl. at 521.

a.

SeveritV of Harm

Petitioner asserts that

rofessional ^stigma, retaliation,

and economic duress will result if petitioner's identity is
disclosed.

As suggested by the preceding discussion, fears of

such harm befalling a confidential informant are reasonable

although necessarily difficul

of proof.

As a tax whistleblower,

petitioner is especially vulnerable to such harm, we believe,
considering the absence of an iretaliátory provisions in seötion
7623.

Petitioner's counsel represents, and respondent does not
dispute, that petitioner is o

an age. and station in life that

necessitate,continued employm nt$. . The*record reasonably supports

the conclusion that disclosin

petitioner's identity 'could

adversely af,fect not merely p titioner's current employment but
also petitioner's future empl yability. v -In particular, the
record strongly suggests that hetitioner acquired the inforination
in question not by chance but rather in the normal course of
employment for X and that peti ioner was privy to internal
deliberations and communications regarding the_events.that

allegedly gave rise to X's underpayment.

Revealing petitioner's

status .as a tax whistleblower in these circumstances would likely

35

cause severewdåmægevtoTpetitionêr'4s*standing in^ thé profèssional
communi ty Jhat . providesr pe ti t ioner ' s Lcustomarÿ "sòurce ^ðf
livelihöod÷anducculdWwell jeopardize%>etitiòner''s employüteñt
Moreover, the fact thatietitionèrais no lónder-émploÿed by
X does not immuriize petitioner f òm thet possibility of
retaliation. 3:If pëti:tiorie

séêkh otheriemplöyäentuin the fúture,

any prospect ive Jemplóyer coûldt reqüirë- pe t i tionér' t o pròvidè

names of ;previousDemployers, %ncludifiòux, which could jeopardi e
petitionei'jsFchances byebranding ipetiitionëf ä förmår
whistleblowei,.

Finally, peti*tionér da

sóéedaý find

t desíífabl

. or inecessaryato isäekereempTòýméht wits X+ónly -to f ace retaliat iö
as a whistleblowe walSee Hodgsonuvi Clidflies Martfin Inspectors of
Petroleumy ?Inc ,

159 ~Ë.2dó03÷," 3069¼5th dir.

similar reasons that an informer's privilég

1972)

(fiiiding" för

was available to thè

Government with respect to the defénd nt s foriner émployees in a
case brought iinde

the FLSÄ) .

It is possible that ot-her judicial remedies, such as
claims for torticus interference with contract .of business
relstion 541
aHd défamation7migÊtN>é Ivåilsble to petitioner if X
wereato gttempt to "poison the Nell for petitioner. 1 See United
States ex rel. Permison v. Superlative Techs., Inc., 492 F. Supp.
2d 56,1

564

(E.D. qVa. 2007)

(commentinggon possible :remedies

potentially available to a qüi tam plaintiff for whom the

antiret a¼iatory prowisions of t;hegalse Claims Act were
inapplicable) . But' even tliese. types 'of possible remedies would
be unavail;ing where a prospective semployerulearnedtof
petitioner's.whistleblöwing from a source other than X, e.g.,
f rom this Court ' s publi c records .

In sum, petitioner has d monstrated a risk of harm thát far

exceeds in severity mere embatrassment×or annoyance .

The

retaliation, ; professional ostracism, and economic vduress which
petitioner reasonably fears«a$e, we believe, no less severe than
the harm posed to attorneys and doctors suing to enjoin
disciplinary proceedings, uns ccessful job applicants suing to

protect t·heir reputation, public aid recipients, or Nativet
Americans joining in a lawsuiË p;Ltting their personal inteÊests
against those of their communities--all cases in,which plaintiffs

have been allowed to proceed

nonymously.

See cases discussed

supra ,Part III . C. 1. c . i . and ii . 042But .whether vpetitioner' s harm is
sufficiently severe to justify granting petitioner's request for
anonymity depends upon additiänal considerations,, including the
social interests at stake..
b.

Social Int rests

The social interests at

take are mixed.

On the one hand,

for reasons previously discussed, there is strong social interest
in protecting petitioner's id ntity as a confidential informant.

On the other hand, the people generally have a right to know "who
is using their courts" .
of Wis.,. 112 F.3d 869,

-Doe
872

. Blue Cross & Blue Shield Uflited

(7 h Cir. 1997).

Becàuse we have he d

that respondent is 'entitled tô summary judcfmenti on a threshold
legal issue. which does not dekend to any appreciable extent on
petitioner's identity, we believe that the þublic's interest in

- 3-7. -

knowing petitigner's; identity isc#elatively weaki
Sealed Plaintiff N. Sealed .Defendant

See, e.g.,

537 .F.3d at"190 191; Does

Thru XXIII v. Advanced Textile Corp., 214 F.3d at 1 7

1073

Lozano v

v

City of Hazleton,

Rio, 241 F . R . D .

15

96 F

Sup%2d ét 512. D

(" [W.] here a lawsuits * * * Iseek

an abstract quest on7of lawathat a fectsv maný sitì1ilàrl
indiyi luals, thq identitiesgofethe partin 7623 (b) .

approach, which we cannot say is

Respondent'

disinterested, would confront claimants with a dilemma of either
forfeiting confidentiality to seek judicial review or forfeiting
udicial review.

The likely

pshot would be á"chilling effect on

some claimants who, have a- com elling need to proceed anonymously.
This result would be at odds

ith the ostensi-ble legislative

purpose, of encouraging tax whistleblower claims and promoting
public, confidence, through juc icial .oversighti , in the
administration of the tax whi tleblower award program.
3.

Conclusion:

Granting Petitioner'Anonymity

We conclude that granting petitioner's request for*anohymity
strikes a reasonable balance between'petit'ioner's privacy
interests as a confidential in ormant and the relevant social
interests, taking into account the nature and severity of the

asserted harm from revealing petitioner's identity and the
relatively weak public interest in knowing petitioner's. identity.
.

Consequently, .pursuant to section 7461 (b) (1) and Rule 103 (a) we

shall permit pet i.tioner to probÊd, effectively anónyìnously, as a
"whi s t1eblower" .
In furtherance of this decision

we shall

r ler the parties

to redact from the existing record and from any future
submissions any :.nformation that would tend to reveal
petitioner's identity.

Furthermore, because of concerns that

revealing· X's identity could enable petitioner's identïty to be
deduced, we shal] also order the parties to redact from the
record X s name.snd any identifying information regarding X.3°
D.

Denying Petitioner'è Mötlì~on To Seal the 1 ecórd

We believe that permitting petitioner to proceed anonymously
and requiring redaction of identifying information under the
measures just described will adequately protect petitioner's

legitimate privacy interests without the need to seal the record,
thereby preserving in large measure the public's ability to

29We do nOt nean to suggest that this balancing test would
or should necessérily result in anonymity for all tax
whistleblowers ir this Court. tiltimately, absent any legislative
directive to the contrary, each request to proceed anonymously
must stand upon its own.
°Such redact ions should encompass those mandated by Rule 27
as well as any additional redactions necessary and appropriate to
protect the identity of petitioner and conceal the identity of X.
We do not consider in this case the extent, if anyr to which theidentity of the subject of a whistleblower claim should be
protected inoa, case in whiêh discloèìng the subject's identity
would not tend to feopardize the uhistleblower's legitimate
privacy interests.

- 40 -

follow the legal proceedings in this case.
shall deny petitioner's motio

Consequently; we

to seal the record."

To reflect the foregoing
An appropriate order
will be issued, and order and
decision will be entered for

respondent .
Reviewed by the Court .
COLVIN, COHEN, VASQUEZ, GOEKE, WHERRY,

KROUPA, GUSTAFSON,

PARIS, and MORRISON,e JJ., agr e with this majority opinion.

"We shall not lift the t emporary eal, however, until after
the parties have been þrovided an opportunity, to redact the
record pursuant'to the Court
order.

-41-

HALPERN,

.

conctîrrih 540:
"Snitches get st'ïtchès "

No do bt

we can infer- Congress'Qawaféness of that old piece of advi e when
it provided a þublic forum (the Táx Court) in which a
whistlebloùer might seeki.reíriew öf hsi claim that îhe
Commissioner erräd^in nôt5 þäying*her fó

fingering a tax cl eat o

detecting someone'sCùndéróáyinènt90f tiäk.

While the majorit

h s

done an admirable job in assèm1511hg the law r gärdïn
conf identiality, - Fda%otbl$elièvè?thath i t has ädequat-e

considered whethef,^in Eliè?face+óf Congress' ichclice of a pubiic
forum for such actions, we should

fafE What amdunts to a

ulè o

law shielding whistle 16wers still in tilie workfÊrce ffom

identi=fication.
The evidence the majorftý^refies on. to 'suppÍort its
conclusion that i$entifyilig petfitîibnéf °could advsrsely affecti hèr
employment prospécts is pet*ikionef's affidavït that her present
employek, ànd *any prospectiÜe emplöyer, woulél riot want to em%1c5y
someone'knòùn to

e a snitbh.

concltísion seems

orrect

Ñajblit

op. pp. 4, 34-35.

but hot becåuse pet-itionè

Th

has proven

that she, partláu larlik among winstlebloüers remäining in thë
workforce, would

ààel empIòyment- discriimination were we t

revèa

her identity) but because hër'claïmiings trûè, as a $Ãtter of

common sense, for all whistleblowers remaining in the workforce
whose identity i3 revealed..

W ile the majority suggests that the

use femin:.ne personal pronouns as a convenience with no
intent to identify petitioner's ehder

public' s interest in knowing a whistleblower' s -identity might be
stronger in a case, unlike . this one,. that is not disposed of on
respondent's motion for summary judgment, the majority has

identified a class.of whistleblowers (those in the .workforce)
whose requests , for anonymity would, I assume (following the
maioriry's opinion), be grantpd,s at least-in the
a case.2

042early
stages of

Without contradictirig thi_s case, what.additional

evidence m ght we demand of t e next whistleblower coming before
us, expressing a genuine fear of employment discrimination, and
asking for at least temporary anonymity?
The privacy protections äfforded by statute to _those
participating in, or affectedgby, whistleblower actions may be
inadequate .

For, instance, thë National Taxpayer Advocate

recommended to Congress in 20 .0 that it amend the Internal
Revenue Code to require redac ion of third-party return
information in administrative and judicial proceedings relating
to wh.istleblower claims.

hiational Taxpayer. Advocate, 2010 Annual

Report to Congress 396-399 (2Õ10)

(Legislative Recommendation:

Protect Taxpayer Privacy in Whistleblower- Cases) . 042 One .could.
argue that Congress intended whistleblowers . to bear the privacy,

risks inherent in. asking for review of their whistleblower cl.aims

2That is because^ the risk of' identification as a
whistleblower and, thus, the risk of employment discriminaÊion,
exists from the beginning of a case, since, as.an administrative
matter, to identify whistleb ower cases, we add to the docket
number of each such case the letter "W".

-43-

in a public forun (the Tax Court).

But if Congress did not

intend that, and because we are writing a rule rather than
disposing of a sjngle case, I think it best we leave the fix to
Congress.

I have concurred in the result in this case because I think
that we should give whistleblowers contemplating a section
7623 (c) (4) action fair notice that we will not automatically
grant anonymity upon a.claim of possible employment

discrimination.

Here we to decide this case as I would,

dissatisfied whistleblowers.with a fear of employment
discrimination would, before filing a petition with the Court,
weigh the expected dollar return from commencing a section
7623 (c) (4) action against the expected cost (measured in dollars)
of the disadvantages associated wi.th the public disclosure of
information that ordinarily becomes part of the case file and the

public record in 2. Tax Court case.

Some whistleblowers may find

that the expected costs outweigh the expected benefits.3

Until

(and unless). Congress acts, I believe that is the best we can
offer.
HOLMES and WHERRY, JJ., agree with this concurring opinion.

31 do not, however, rule. out anonymity upon a sufficient,
fact-specific sho ing. See, e.g., Anonymous v. Commissioner, 127

T.C.

89

(2006)

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/agency%3Atax-court%3A5da5f7e779c1af9d. Public record. Not legal advice.