1 4 8 T.C. No . 7

UNITED STATES TAX COURT

W HISTLEBLOW ER 1 2 5 6 8 -1 6 W , Pet i t i o n er v . COM M ISSIONER OF INTERNAL REVENUE, Res po n d en t

Do ck etNo . 1 2 5 68 -1 6 W
. Fi l edM arch 2 2 , 2 01 7
.

P h as m ov edt o p ro ceed an o n ym o u sl y i n th i s wh i s t l eb l o wer act i o n i n v o l v i ng P's cl ai m th ata t ax pay er av oi d eda t ax l i ab i l it y i n ex ces s o f $ 3 b il l i o n . P b el i ev es th at , i f P's i d en t i t y were d i s cl os ed , P wo u ldb e atri s ko f ret al iat i o n , p hy s i cal h arm , s o ci al an dp ro fes s io n al s t ig m a, an d eco no m i c d i s t res s . Becau s e t h e p ubl i c h as an i n t eres ti n kn o wi n g th e i d en t i t i es o f p ers o n s u s i ng th e co u rt s , we m u s tres ol v e th e co m p et i n g s o ci al i nt eres t s ats t ak e. Wh i s t l eb l o wer 1 4 1 06 -1 0 W v . Co m m is s i o n er, 1 3 7 T.C. 1 8 3 , 2 0 5 (2 0 1 1) (b al an ci n g s oci al i n t eres t s o f (1 ) p ro t ect i n g i den t i t y

o f co n fi d en ti al i n fo rm an twi t h (2 ) t h e p eo p l e's ri g h tt o kn ow wh o i s u s i n g thei r co u rt s ). P h as m ad e an ad equ at e s h o wi n g that , atth i s earl y s t ag e i n th e act io n, t he p ub l i c's i n t eres ti n kn owi n g P's i d en t i t y i s rel at i v el y

weakan dd o es n o t o u twei g h th e s o ci al i n t eres to f p ro tect i n g P's i d en t i t y as a co n fi d en t ial i n fo rm an t . See i d . Nev erth el es s , as t h e act i o n p ro g res s es , th e b al an ce m ay ch an g e, an d , p erh ap s b ecau s e o f t he s i ze o f t h e awardth atP m ay b eco m e en t i t l ed t o , o r b ecau s e o f o t h er d ev el op m en t s , th e p ubl i c's i n t eres ti n l earn in g P's i d en t i t y m ay o u twei g h co nt i n u i ng t o p ro t ecti t
.- 2
- Hel d : W e wi l l g ran tth e m o t i on , an d P m ay p ro ceed an o n ym o us l y

u n t il an d u n l es s th e Co u rtd et erm i n es d i fferen t l y .

Seal ed , 1 fo r p et i t i o n er. Pat ri ci a P. Dav i s an dAm an d a L. M y ers , fo r res p o n den t
.

OPINION HALPERN, Ju d g e: Pet i t i o n er h as b ro u g h tth i s act i o n p u rs u an tt o s ect i o n 7 6 2 3 (b ) fo r u s t o rev i ew res p o nd en t's d en i al o f p et i ti o n er's cl ai m fo r a wh i st l eb l o wer award
. 2 Th i s rep o rtad dres s es p et i t io n er's m o t i on t o p ro ceed
an o nym o u s l y

u n d er Ru l e 3 4 5 (a) (m o t i o n ).

Back gro u n d Pet i t i o ner h as as s i g n ederro r t o res p o nd en t ' s d et erm i n at i o n t o d en y p et i t i o n er a wh i s t l eb l o w er award
. Am o n g o th er av erm en t s i n s upp o rto f p et i t i o n er's as s i g n m en t s o f erro r, p et i t i o n er av ers t hatth e t ax p ay er wi t h res p ectt o

1 Th e n am es o f p et i ti o n er's co u ns el h av e b een o m i t t edi n fu rt h eran ce o f p ro t ect i n g p et i t i o ner's i d en t i t y .

2 Al l s ect i o n referen ces are t o th e In tern al Rev en u e Co d e o f 1 98 6 , as am en d ed , an dal l Ru l e referen ces are t o t he Tax Co urtRu l es o f Pract ice an d Pro cedure.- 3
-

wh o m pet i t i o n er i s cl ai m i ng a wh i s t l eb l o wer award (t ax p ay er) co m m i t t edt ax frau d
res u l ti n g i n an u npai dt ax l iab i l i t y o f wel l o v er $ 3 b i l l i on an ds ubject i n g th e t ax p ay er t o m i l l i o ns m o re i n p en al t i es . Co n cu rren t l y

wi th fi l i n g th e p et i t i o n , p et i t i o n er fi l edth e m o t i o n , p ray i n g t o b e al l o wedt o p ro ceed an o n ym o u s l y b ecau s e, i f p et i ti o n er's i d en t i t y were d i s cl os ed , p et i t i o n er wo ul db e atri s ko f ret al i at i o n , p h y s i cal h arm , s o ci al an d p ro fes s i on al s t i g m a, an deco n o m i c d i s t res s. Pet i t i o n er s up p o rt edth e m o t i o n wi t h a d ecl arat i o n , i n wh i ch , am on g o t h er t h i n g s, p et i t io n er rep res en t s t h e fo l l o wi n g . Pet i t io n er was p rev i ou sl y em p l o y edb y an en t i t y rel at ed t o th e t ax pay er. Pet i t io n er's cl ai m s co n cern s i g n i fi can t u n l awfu l t ax co d e v i o lat i o n s b y th e t ax p ay er an daffi l i at es . Pet i t io n er acq u iredkn o w l ed g e ab o u tth e v i ol at io n s i n the
n o rm al co u rs e o f p et i t i o n er's em p l oym en t . Pet i t io n er h as a wel l -fo u n d edco n cern th atd i scl o s u re o f p et i t i o n er's i den t i t y wo u l dcau s e t h e t ax pay er t o ret al i at e ag ai n s t p et i t i o n er an dp et i t i o n er's fam i l y , res u l t i n g i n p ro fes s i o n al an d p ers on al o s traci s m , eco n om i c l o s s , an d ev en th reat s t o p et i t i o ner's fam il y ' s s afet y . Di s cl o s in g p et i t i o n er's i d en ti t y

wo u l dal so l i k el y

cau s e s ev ere d am ag e t o p et i t i o n er's s t an d i ng i n p et i ti o n er's pro fes s i o n al co m m u n it y , as wel l as em

b arras s m en tb ot h p ro fes s i on al l y

an d pers on al l y .- 4
-

Up o n recei p t o f t h e m o t i o n , we h el d a t el ep h o n e co nferen ce wi th th e p art i es i n wh ich res p o n den ts t at edth ath e h adn o o b ject io n t o o u r g ran t i n g th e m o t i o n . W e s ai dth at , n ev erth el es s , th e p ub l ic h as an i n t eres ti n kn o w i n g t h e i d en t i t i es o f p ers o n s u s i n g th e co u rt s , an d , i n co n s i d eri n g t h e m o t i o n , we m u s t res o l v e t h e
co m p et i n g s o ci al i n t eres t s ats t ak e. See, e.g ., Whi s t l eb l o wer 1 4 1 0 6 -1 0 W v . Co m m i s s i o n er, 1 3 7 T.C. 1 8 3 , 2 0 5 (2 0 1 1) (b al an ci n g s oci al i n t eres t s o f (1 ) p ro t ect i n g i d en t i t y o f co n fi d en t i al i n fo rm an t wi th (2 ) t h e p eo p le's ri gh tt o kn o w wh o i s u s i n g thei r co u rt s ). W e h av e fi l ed p et i t io n er's fi rs ts up p l em en t al d ecl arat io n , wh i ch co n s i s t s o f a 1 3 -p ag e s up p l em en t al d ecl arat i o n an dap p ro x i m at el y 2 5 0 p ag es o f ex h i b i t s (p ri nci p al l y

co p i es o f (1 ) m ag azi n e an dn ews p ap er art i cl es an d(2 ) t h e co m p l ai n t s i n tw o leg al act i o n s ), al l o f wh i ch are d i rect edats up po rt i n g p et i t io n er's cl ai m o f p o s s i b l e ret al i at i o n were p et i t i o n er's i d en t i t y d i s cl o s ed
. Di s cu ss i o n Ru l e 3 4 5 co n cern s i t s el f wi t h p ri v acy p ro t ect i o n s fo r fi l i n g s i n wh i s tl eb l o wer act i o ns . Parag rap h (a) o f t h e Ru le al l o ws p et i ti o n ers i n wh is t leb l o w er act i on s t o m o v e t h e Co u rtfo r p erm i s s i on t o p ro ceed an o n ym o u s l y . Parag rap h (b ) ad dres s es th e red act io n o f fi l i n g s t o el i m i n at e referen ce t o th e t ax pay er t o wh o m th e wh i s tl eb l o w er cl ai m

rel at es . W i t h res p ectt o th e s h o wi n g thata wh i s t l eb l o wer- 5
-

m u stm ak e t o p ro ceed an o n ym o u s l y , we h av e s ai d: " Awh i st l eb l o wer i s p erm i t t ed t o p ro ceed an o n y

m o u sl y i f t h e wh i s t l eb lo wer p res en t s a s u ffi ci en ts h o wi n g o f h arm th ato u t wei g h s co u n t erb al an ci n g s o ci et al i n t eres t s i n kno wi ng th e wh i st l eb l o wer's i d en t i t y . " Whi s t l eb l o wer 1 0 9 49 -1 3 W v . Co m m i s si on er, T.C. M em o. 2 0 1 4 -9 4 , at* 5 ; s ee al s o Wh i s t l eb l o wer 1 4 1 06 -1 0 W v . Co m m i s s i on er, 1 3 7 T.C. at2 0 3 . Th e b al an ce o f wh i s t l eb l o wer h arm an ds o ci et al i n t eres t , h o w ev er,
m ay s h iftas a cas e p ro g res s es . InWh i s tl eb l o wer 1 4 1 0 6 -1 0Wv . Co m m i ss i o n er, 1 3 7 T.C. 1 8 3 , we co n s id eredb ot h th e Co m m i s s i on er's m o t i o n fo r s u m m ary ju d g m en tan dth e wh i s tl eb l o w er's m o t i o n t o s eal th e reco rdan dp ro ceed
an o nym o u s l y . W e g ran t ed t h e Co m m i s s i o ner's m o t i on o n the g ro un d t hatth e wh i st l eb l o wer h ad no tm eta cri t i cal p reco n d i t i o n fo r t he g ran to f a wh i s t l eb l o wer award ; v iz, t h at h e h adfai l edt o s h ow t h at , p u rs uan tt o h i s wh i s t l eb l ower cl ai m , th e Co m m i s s i o n er h adco ll ect edan y t ax p ro ceed s. Id . at1 8 9 . W e d en iedth e wh i st l eb l o wer's m o t i on t o s eal th e reco rdb utg ran t ed h is m o t i o n t o p ro ceed
an o nym o u s l y . W i t h res p ectt o h i s m ot i on t o p ro ceed an o n ym o u sl y , we ex p l ai n ed :

" Becau s e we h av e h el dth atres p o n d en t i s en t i tl ed t o s u m m ary ju d g m en to n a th res ho l dl eg al i s s u e wh i ch d o es n o td ep en d t o an y ap p reci ab l e ex t en t o n p et i t i o n er's i d en ti t y , we b el i ev e t h atth e p ub li c's i n t eres ti n kn o wi n g p et i t i o n er's i d en t i ty i s rel at i v el y

weak
. " Id . at2 05 . Th e i m p l i cat i o n , o f co u rs e, i s t h at , i f we- 6
-

h ad n o td i s p o s edo f t h e act i o n atth e b eg i nn i n g o f t h e cas e o n th e Co m m i s s i o n er's
m o ti o n fo r s u m

m ary ju d g m en t , th e s t ren g t h o f t h e p ub l ic's i n teres tm i g h t , as th e
cas e p ro g res sed , h av e ap p eared s t ro n g er. In d eed , th e t erm s o f b o t h Ru l e 3 4 5 (b ) an dthe ex p lan at o ry n o t e
acco m pan y i n g the Co u rt 's ad o p t i on o f Ru l e 3 4 5 , s ee Ru l e 3 4 5 Ex p lan at o ry No t e, 1 3 9 T.C. 5 7 7 , d em on s t rat e t h atth e wei g h i n g o f p o t en ti al h arm fro m d i s cl o s i n g th e i d en t i ty o f a wh is t l eb l o wer o r t ax p ay er ag ai n stco u n t erb al an ci n g s o ci al i n t eres t s
can s h iftas a cas e p ro gres s es . Ru l e 3 4 5 (b ) (g en eral l y req ui ri ng th e red act i o n o f i n fo rm at i o n i d en t ify i n g th e t ax p ay er) s p eci fi cal l y p ro v i d es th at " [t ] h e Co urti n i t s d i s cret i o n m ay

l at er u n s eal th e referen ce l i st[i d en t i fy in g red act edi n fo rm at i o n ] , i n wh o l e o r i n p art , i f ap p ro p ri at e." Th e ex p l an at o ry n ot e el ab o rat es : By co n ceal i n g t h e n am e o f t h e n onp arty t ax p ay er, atl eas ti n th e earl y s t ag es o f l i t i g at i on , th e co n s equ en ces o f i nad v ert en t d i scl o s u re o f s u ch i nfo rm at i o n are g reat l y m i t i g at ed , s i n ce th e i n fo rm at io n co u l d n o tb e read i l y

l i n k ed t o th e n o np art y

t ax p ay er. Ats o m e p o in ti n t h e l i ti g at i o n , i f fo r i n s t an ce th e Co u rtd eci d ed t h atth e wh i s t l eb l o wer was en t i t l edt o a l arg e award , th e Co u rtm i g h tco n cl u de t h atth e p ub l i c's i n t eres ti n kn owi n g the n o np art y t ax p ay er's i d en t i t y

was s u ffi ci en tl y g reat th atth e n o np art y

t ax p ay er's n am e s h o u ldn o l o n g er b e p ro t ect ed
. Ru l e 3 4 5 Ex p l an at o ry

No t e, 1 3 9 T.C. at5 7 9
. Gi v en th atth e red act i on o f i n fo rm at i o n i den t i fy i n g t h e n o npart y t ax pay er th ati s g en eral l y

req u i redb y

Ru l e 3 45 (b ) i s o nl y p ro v i s io n al , th e d is cret i o nary- 7
-

p ro t ect i o n th ata wh i s t l eb l o wer recei v es fro m t he g ran t i n g o f a m o t io n t o p ro ceed
an o nym o u s l y

m u s t , a fo rt io ri , b e p ro v i si o n al as wel l . Al t h o u g h Ru l e 3 45 (a) d o es
n o ts p eci fi cal l y

co n t em p l at e rev o cat i o n o f an on ym i t y i n i t i al l y g ran t ed , i t m

u s t fo l l o wth atth e Co u rt ' s d i s cret i on t o ei t h er g ran to r d en y a m o t i o n t o p ro ceed
an o nym o u s l y

al s o en co m

p as s es th e au th o ri t y

t o co n d i t i on an y

rel i ef g ran t edo n ap p ro p ri at e co nd i t i o ns . In o n l y th ree rep o rt s , i n ad d it i o n t o Wh is tl eb l o wer 1 4 1 0 6-1 0 W , h av e we ad dres s eda wh i s t l eb l o w er's m o t i o n t o p ro ceed an on ym o u s l y . InWh is t l eb l o wer 1 0 9 4 9 -1 3 W

v . Co m m i s s i o n er, T.C. M em o. 2 0 14 -9 4 , at* 3 , we accep t edas t ru e fo r p u rp os es o f d i s p o s in g o f t h e wh i s t l eb lo wer's m o t i o n t h atU.S. Dep art m en to f J u s t i ce at t o rn ey s h adi n fo rm edth e wh i s t l eb l o w er th atth e t arg et s were co n n ect ed wi th o rg an i zedcri m e an dt erro ri s m an d co u l d res o rtt o p h y s i cal fo rce o r h arm i n
co n nect io n wi t h th ei r act i v i t i es . Al s o , we accep t edas tru e t h atthe wh is tl eb l o wer h ad recei v eda d eat h t h reat fro m o n e o f t h e t arg et s th ro u g h i ts co u n s el . Id . W e fo u n d t h atth e h arm

th at co u ld b efal l th e wh i s t l eb lo wer o u t wei g hedth e s o ci et al i n t eres ti n kn owi n g h i s n am e. W e d et erm i n edt o g ran th is m ot io n an ds t at edth at th e reco rdwo u l drem ai n s eal edu n t i l fu rt h er o rd er o f t h e Co u rt
. InWhi s t l eb l o wer 1 1 3 3 2 -1 3 W

v . Co m m i s s i o n er, T.C. M em o. 2 0 14 -9 2 , th e wh i s t l eb l o wer h adm o v ed b o th t o s eal th e reco rdan dt o p ro ceed an o n ym o u s l y . W e accep tedas tru e t h at ,- 8
-

wh en th e wh i s tl eb l o wer h adrai s edt o t h e t arg etco n cern s o v er i t s t ax s t ru ctu re, t h e t arg eth adu s edp h y s i cal fo rce an darm edm en t o i n ti m i dat e t he wh i s t l eb lo wer an d t o p rev en td i s cl o s u re. Id . at* 1 -* 3 . W e al s o accep t edas tru e t h atth e wh i st l eb l o wer h ad recei v eda d eat h th reat th ro u g h th e t arg et 's co u n s el an dth atth e Go v ern m en th ado ffered t o p l ace h i m i n t h e wi t n es s p ro t ect i o n p ro g ram . Id . at* 4. Fi n d in g a ri s ko f ex t rem e p h y si cal h arm t o th e wh i s t l eb l o w er an dh i s fam il y , we g ran t edb o t h m o t io ns . W e d i dn o t , h o wev er, ad d t h atth e reco rd wo u l drem ai n
s eal edu n t i l fu rt her o rd er o f t h e Co u rt . Fi n al ly , i n Wh i s t leb l ower 1 3 4 1 2 -1 2 W v . Co m m i s s i o n er, T.C. M em o . 2 0 1 4 -9 3 , th e wh is t l eb l o w er al s o h adm o v edt o p ro ceed an o nym o u sl y . Al t h o u g h h e al leg edo n ly th e ri s ko f fi n an ci al ret al iat i o n (l os s o f p en s i o n b en efi t s), s o ci al an dp ro fes s io nal s t i g m a, an d eco n o m ic du res s , an d al th o u g h we v oi cedo ur res erv at i o n s ab o u tth e l ik el i h o o do f th e p ro s p ecto f fi nan ci al ret al i at i o n , we fo un d t h atth e n atu re o f t h e p o ten t ial h arm t o th e wh i st l eb l o wer o u t wei gh edth e s o ci et al i n t eres ti n kn o wi n g h i s i d en t i t y . W e d et erm i n edt o g ran th i s m o t i o n an ds t at edth atthe reco rdwo u ldrem ai n s eal ed
u n t i l fu rt h er o rd er o f t he Co u rt
. Pet i t i o ner h as m ad e a s u ffi ci en ts h owi n g as ju d gedb y th e s tan d ard s s etfo rt h i n o u r o ne Di v i si o n Op i n i o n , Wh i s t l eb l o wer 1 4 1 0 6-1 0 W , an di n the t h ree M em oran du m

Op in i o n s , fo r u s t o g ran t t he m o t i o n . An dwe wi l l d o s o , b u ts i n ce- 9
-

we d o n o tkn o w wh attu rn s th i s cas e m ay t ak e, an d g i v enthe ex t rao rd i n ary
am ou n t s o f u n co l l ect edt ax an d p en al t y l iab i l i t ies p et i t i o n er al l eg es , wi t h th e p o s s i b i l i ty

th atp et i ti on er m i g h trecei v e a wh i s tl eb l o wer award o f up t o 3 0 % o f t h e p ro ceed s t h e Co m

m i s s i o n er co l l ect s (an awardth atm i gh tequ al o r ex ceed $ 1 b i l l i o n ), s ee s ec. 7 6 2 3 (b )(1 ), we can n o ts ay th at , ats o m e fu tu re t i m e i n thi s act i o n , we m ay n o trev i s i tth e b al an ci ng b et ween al l eg edh arm t o p et i t i o n er an dth e
s o ci et al i n t eres ti n kn o wi n g p et i t i o n er's i d en ti t y an dd et erm i n e t hatan o n ym i t y i s
n o l o n ger ju s t i fi ed . Su ch an ap p ro ach i s co n si s t en twi t h wh at o t h er Fed eral co u rt s d o wh en faced wi t h a req ues t t o u s e p s eu d o n ym s i n t h e cap t i o n o f a co m p l ai n t
. See, e.g
. , Do es I th ruXXIII v . Adv an ced Tex ti l e Co rp ., 2 1 4 F.3 d1 0 5 8, 1 0 6 9 (9 t h Ci r. 2 0 00 ) (" W e reco g n ize t h atth e b al an ce b et ween a p art y 's n eedfo r an o nym i t y
an d th e i n t eres t s wei g h i ng i n fav o r o f o p enju d i ci al p ro ceed i n g s m ay ch an g e as th e l i ti g at i o n p ro g res ses ." ); J oh n Do e 1 4 0 v . Arch d i oces e o f Po rt l an di n Or., 2 4 9 F.R.D. 3 5 8 , 3 6 1 (D. Or. 2 0 08 ) (d en y i n g d efen d an ts ' m o t i o n t o req u i re p l ai n t i ff t o p l eadh i s n o n fi ct i t i ou s i d en t i ty b u tem p h as i zi n g t h atth e d efen d an ts m ay refi l e th ei r m o t i o n atl at er s t ag es o f th e cas e). Iti s o n l y fai r t h atwe i n fo rm p et i t i o n er th atth e b al an ce t h atwe n o w fi n dt o wei g h i n fav o r o f an o n ym i t y m ay ch an g e, s o th atp et i t i o n er m ay

t ak e th atri s ki n to acco un t i n d eci d i n g wh et h er t o p ro ceed wi th th e act i o n .- 1 0 - Co n cl u s io n Fo r t h e reas o n s s t at ed , we wi l l g ran t th e m o t i o n , an d p et i t i o n er m ay p ro ceed
an o nym o u s l y

u n t il an d u n l es s th e Co u rtd et erm i n es d i fferen t l y . Anap p ro p ri at e o rd er wi ll b e i s s u ed
.