T.C. Mem o. 2 01 4- 92

UNITED STAT ES TAX COURT

W HISTLEBLOW ER 11 33 2- 13 W , Pet it io ne r v. COMM ISSI ONER OF INTERNAL REVENUE, Resp on de nt

Doc ke t No . 11 33 2- 13 W
. Fi le d M ay 20 , 20 14
.
Seal ed , forpe ti ti on er. Seal ed , forres po nd en t.

MEMORANDUM OPINION KROUPA, Ju dg e: Thi s ca se is be fo re the Co urt o n the whi st le bl owe r’s
m ot io n t o s eal an d the whi st le bl owe r’s m ot io n t o p ro ceedan on ym ou sl y un de r-2
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[* 2] Ru le 34 5( a). The wh is tl eb lo wer h as de m on st rat edth atsea li ng th e rec or d i s 1 2 ap pr op ria te inth is cir cu m st an ce b ecau se fai lu re t o d o s o c ou ldres ul t i n s ev ere ph y si cal harm

to th e whi st le bl owe r. The wh is tl eb lo wer h as als o d em on st rat edth at pr oc eed in g ano nym ou sl y is ne ces sa ry

to pro te ctth e whi st le bl owe r’s pr of es si on al rep ut at io n, ec on om ic in te res ts an d p ers on al saf ety . W e wil l g ran t b ot h m ot io ns . Bac kg ro un d The fol lo win g i nf

orm at io n i s s ta te d o nl y

forpu rp os es of r es ol vi ng th e pe nd in g m ot io ns an d n otforpurp os es of e st ab li sh in g the va li di ty of th e whi st le bl owe r’s cl ai m . Pet it io ne r is a whi st le bl owe r th atrep orte d atax frau d s ch em e to th e Gov ern m en t. Durin g the whi st le bl owe r’s em pl oym en t, the whi st le bl owe r le arn ed of a ta x s tru ctur e in vo lv in g the whi st le bl owe r’s em pl oyer an d s ev eral rel at ed
en ti ti es an d s ub si di ary co m pa ni es (ta rg et s) . W

he n the whi st le bl owe r rai se d
co nc ern s o ve r th e ta x s tru ctur e to th e whi st le bl owe r’s em pl oyer, th e whi st le bl owe r’s em

pl oyer us edph y si cal for ce an d arm edm ento in ti m id at e th e The Co urt i s i ss ui ng th is Mem or an du m Opi ni on be cau se th ere i s a l ackof 1 whi st le bl owe r cas el aw. All sec ti on refe ren ces are t o the Int ern al Rev enue Co de ineffe ctforall 2 rel ev an t t im es , andall Ru le refe ren ces are t o the Tax C ou rt Rul es of P ract ic e an d Pro cedur e, un le ss othe rwis e in di cat ed . All a m ou nt s ar e ro un de d t o the ne ares t do ll ar.-3
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[* 3] whi st le bl owe r an d p rev en t d is cl os ur e. The wh is tl eb lo wer was subs eque nt ly fir ed . The wh is tl eb lo wer rep orte d the tax sch em e to th e Gov ern m en t an d fo r se ve ral y ears ass is te d the Gov ern m en t i n i ts in ve st ig at io n o f targ et s. Ba se d p art ly
on th e whi st le bl owe r’s in fo rm at io n, the Gov ern m en t ev en tu al ly recov eredm or e th an$3 0 m il li onintax es , pen al ti es an d i nt eres t. The whi st le bl owe r fi le d aFo rm 21 1, Ap pl ic at io n fo r AwardforOrig in al In fo rm at io n, o n F eb ru ary 4, 2 00 8 andsubm it te d t o the IRS Whi st le bl owe r Offi ce (Whis tl eb lo wer Offi ce) d oc um en tary ev id en ce re late d t o the tar ge ts ’ act io ns th e whi st le bl owe r di sc lo se d. Subs eque nt ly, th e whi st le bl owe r res ub m it te d F orm 21 1
on Aug us t 1 2, 2 01 1, s eek in g an awardun de r se ct io n 7 62 3( b) . The Whis tl eb lo wer Offi ce s en t the whi st le bl owe r anawardde te rm in at io n und er s ect io n 7 62 3( a). The whi st le bl owe r fi le d the pe ti ti on see ki ng jud ic ia l re vi ew of th e Whis tl eb lo wer Offi ce s ect io n 7 62 3( a) awar d d et erm in at io n. Thro ug ho utth e in ve st ig at io n Go ve rn m en t i nv es ti ga to rs warn edth e whi st le bl owe r th atth e ta rg et s an d i nd iv idua ls th e whi st le bl owe r rep orte d wer e da ng ero us an d wer e li nk edto vi ol en t ev en ts an d t erro ris t o rg an iz at io ns . Ind eed , th e whi st le bl owe r al le ge s tha t o ve r th e la st10 y ears at l eas t o ne pe rs on who rep orte d a ll eg edwron gd oi ng ag ai ns t o ne of t he tar ge ts was k il le d u nd er s us pi ci ou s ci rcu m st an ces . After l earn in g tha t the whi st le bl owe r was subp oe na edto pro vi de-4
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[* 4] do cu m en ts to th e Gov ern m en t, t arg et s fi le d m ul ti pl e ret al ia to ry

act io ns ag ai ns t the whi st le bl owe r to de te rm in e th e whi st le bl owe r’s ro le inth e in ve st ig at io n andto si le nc e th e whi st le bl owe r. The wh is tl eb lo wer i nc urred si gn ifi can t p ers on al ex pe ns e, sp en t t im e an d s uf fere d p ro fes si on al rep ut at io na l
co st s d efen di ng ag ai ns t the se act io ns th atwere d es ig ne d t o i nt im id at e an d thr eat en th e whi st le bl owe r. The whi st le bl owe r ha s al so rece iv edsi gn ifi can t p hysic al th reat s. Th e whi st le bl owe r rec ei ve d ade ath thr eatfro m th e ta rg et s, co m

m un ic at edth ro ug h th ei r co un se l. Aft er l earn in g o f th e in di vi du al s an d e nt it ie s i nv ol ve d, the Gov ern m en t o ffer edto pl ace t he whi st le bl owe r inth e wit ne ss pro te ct io n p ro gr am . The whi st le bl owe r de cl in edpl acement i n the witne ss pro te ct io n p ro gr am , bu t reque st edan d was gra nt edco nf id en ti al in fo rm an t s ta tu s. Th e whi st le bl owe r was al so for cedto hi re co un te rte rro ris m ex pe rts to advi se th e whi st le bl owe r’s fam il y on saf ety an d p ro te ctth e whi st le bl owe r on tri ps ab ro ad . This pro te ct io n c os t the whi st le bl owe r te ns of t ho us an ds of d ol lars . Desp it e th ei r effo rts , tar ge ts ha ve no t di sc ov eredth e id en ti ty of th e whi st le bl owe r. They were aware o nl y th atth e whi st le bl owe r was subp oe na edby the Gov ern m en t.-5
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[* 5] The whi st le bl owe r fi le d the m ot io n t o s eal an d the m ot io n t o p ro ceed
an on y m ou sl y at t he same tim e th e whi st le bl owe r fi le d the pe ti ti on . Res po nd en t fil edno ti ces of n o o bjec ti on to bo th m ot io ns . Dis cu ss io n W e are ask edto de ci de whet he r th e d oc ke t re co rdinth is cas e sh ou ldrem ai n se al edan d wh ethe r th e whi st le bl owe r sh ou ldbe pe rm it te d t o p ro ceed
an on y m ou sl y . W e b eg inby des cri bi ng th e g en eral pre su m pt io n o f op en ne ss th at at ta ch es to jud ic ia l p ro ceed in gs . Gener al ly, of fic ia l re co rd s o f al l co urts sh al l b e op enan d a va il ab le to th e p ub li c fo r in sp ect io n andco pyin g. Ni xo n v . W arn er Co m m cn s., In c., 43 5 U.S. 5 89 , 59 7 (1 97 8) ; Inre Co or di na te d P retria l Pr oc eed in gs inPetro le um

Pro ds . Ant itru stLit ig ., 10 1 F .R.D. 34 , 38 (C.D. Cal . 19 84 ). Heari ng s an d the ev id en ti ary reco rdof p ro ceed in gs be fo re thi s C ou rt s ha ll be op ento th e publ ic . Secs . 74 58 , 74 61 (a). Co m m on law, s ta tu to ry

law an d the U.S. Co ns ti tu ti on all supp ort thi s i m po rta ntpri nc ip le . W arn er Co m m cn s., In c., 43 5 U.S. at 5 97 ; Will ie Nels onMu si c Co . v. Co m m is si on er, 8 5 T.C. 9 14 , 91 7 (1 98 5) ; Inre Co or di na te d P retria l Pr oc eed in gs inPetro le um Pro ds . Ant itru stLit ig ., 10 1 F.R.D. at 3 8. Th e ri gh t t o i ns pe ctan d c op y jud ic ia l re co rd s, h owe ve r, is no t ab so lu te . W arn er Co m

m cn s., In c., 43 5 U.S. at59 8. Co urts ha ve supe rv is ory-6
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[* 6] po wer o ve r th ei r own reco rd s an d fi le s an d c ou rts ha ve de ni edacce ss to
reco rd s wh ere the co urt fi le s m ig htbe co m e a v eh ic le for im pr op er p ur

po se s. Id
. Seal in g the Reco rd Thi s C ou rt h as bro addi sc ret io na ry po wer t o c on tro l an d s eal , if n eces sa ry , reco rd s an d fi le s i n o urpo ss es si on . W il li e Nel so n M us ic Co . v. Co m m is si on er, 8 5 T.C. at 9 18 . W e m ay , inou r di sc ret io n, s eal th e rec or d o r po rti on s o f th e rec or d i f jus ti ce s o re qu ire s an d the party seek in g s uc h re li ef d em on st rat es go odcau se . Sec. 74 61 (b )(1 ); Rul e 1 03 (a); AT&T Co. v . Grady , 59 4 F .2d59 4, 5 96 (7t h C ir. 1 97 8) ; W il li e Nel so n M us ic Co . v. Co m m is si on er, 8 5 T.C. at92 0; Tava no v. Co m m is si on er, T.C. Mem o. 1 99 1- 23 7, af f’d, 98 6 F .2d13 89 (11 thCir . 19 93 ). To de te rm in e whe th er s eal in g the reco rdis ap pr op ria te , we m us t wei gh th e pr es um pt io n, h owe ve r gaug ed , infav orof p ub li c acc es s t o ju di ci al reco rd s ag ai ns t th e in te res ts adva nc edby the parti es . W arn er Co m m cn s., In c., 43 5 U.S. at60 2; AT&T Co. v . Grady , 59 4 F .2dat 5 96 ; Will ie Nels on Mu si c Co . v. Co m m is si on er, 85 T.C. at 9 19
. Tax pa y ers see ki ng to sea l co urt re co rd s m us t co m e fo rwardwith app ro pr ia te te st im on y an d fa ctua l d at a to sh ow g oo d c au se . Uni te d S tate s v . Uni te d F ru itCo ., 41 0 F .2d55 3, 5 57 n.1 1 (5 th Cir . 19 69 ); Es ta te of Ya eg er v . Comm is si on er, 9 2 T.C. 18 0, 1 89 (19 89 ); Wil li e Nel so n M us ic Co . v. Co m m is si on er, 8 5 T.C. at92 0-7
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[* 7] (ci ti ng Wy at t v . Kapl an , 68 6 F .2d27 6, 2 83 (5t h C ir. 1 98 2) ); Tav an o v . Co m m is si on er, T.C. Mem o. 1 99 1- 23 7. Tax pa y ers m ay no t re ly on c on cl us ory

or un supp orte d s ta te m en ts to est ab li sh cla im s o f harm th atwou ldres ul t fr om di sc lo su re. W il li e Nel so n M us ic Co . v. Co m m is si on er, 8 5 T.C. at92 0; In r e Co or di na te d P retria l Pr oc eed in gs inPetro le um Pro ds . Ant itru stLit ig ., 10 1 F .R.D. at44
. Goo d c au se ha s b eende m on st rat edan d re co rd s h av e b eensea le d wh ere th ere i s a d em on st rat edris k o f ph y si cal harm to th e ta xp ay er o r th e ta xp ay er’s fam il y . Ano nym ou s v . Comm is si on er, 1 27 T.C. 89 , 92 -9 3 (2 00 6) . Goo d c au se ha s al so be ende m on st rat edwher e p at en ts , tra de sec ret s o r co nf id en ti al in fo rm at io n are i nv ol ve d o r whe re an in di vi du al ’s bu si ne ss rep ut at io n wi ll be hu rt. See I n re Sm ith, 6 56 F.2d11 01 (5t h C ir. 1 98 1) (st rik in g an i nd iv idua l’s n am e fro m factua l re su m es ondu e p ro ces s g ro un ds as r es um es were p rep aredincri m in al pr oc eed in g wh ere the in di vi du al was n otin di ct ed ); C ry st al Growe r’s Co rp . v. Dob bi ns , 61 6 F .2d45 8 (1 0th C ir. 1 98 0) (se al in g p orti on s o f rec or d i nv ol vi ng do cu m en ts all eg edto be subjec t t o a tt orne y -cl ie ntpri vi le ge or wo rkpro du ct do ctrin e); In r e Sarka r, 57 5 F .2d87 0 (C .C.P.A. 19 78 ) (s eal in g re co rdin vo lv in g pa te ntap pl ic at io n p ro ceed in g s o tha t the in fo rm at io n wo ul d re m ai n atra de sec ret inth e ev en t o f anadve rs e d eci si on ); S en di v. Pru de nt ia l-B ach e Sec ., 10 0 F .R.D.-8
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[* 8] 21 (D.D.C. 19 83 ) (s eal in g p art ie s’ tax returns to pro te ctco nf id en ti al ity

an d pr iv acy int eres ts ). Mere ly ass ert in g ann oyance , em ba rras sm en t o r harm

to a pe rs on ’s per so na l re pu ta ti on , ho wev er, i s g en eral ly ins uf fic ie ntto de m on st rat e go odcau se an d o ve rco m e th e st ro ng co m m onlaw p res um

pt io n i n fa vo r of

acce ss to co urt re co rd s. Will ie Nels on Mu si c Co . v. Co m m is si on er, 8 5 T.C. at92 1, 9 25 (rec or d n otsea le d wh ere n at io na ll y kn own en te rta in er s ou gh t t o a vo idpubl ic
sc ru ti ny or n ews co ve rag e o f cas e); Tava no v. Co m m is si on er, T.C. Mem o. 19 91 -2 37 (rec or d n otsea le d wh ere t ax pa y er h adciv il su itpe nd in g a ga in st
em pl oyer an d d idno t wan t em pl oyer to lea rnfact s o f cas e). The whi st le bl owe r’s co un se l s ub mit te d an a ffi da vi t tha t d em on st rat es th e se ve re d eg ree o f ha rm

th e whi st le bl owe r an d the whi st le bl owe r’s fam il y m em be rs wou ldris k i f we d o n otsea l the reco rd . The aff id av itan d the pe ti ti on de m on st rat e se ve ral ke y

fact s. Fi rs t, t arg et s ar e li nk edto terro ris t o rg an iz at io ns . The whi st le bl owe r rec ei ve d ade ath thr eat , comm un ic at edth ro ug h t arg et s’ cou ns el , in
co nn ect io n wi th th e whi st le bl owe r’s co op erat io n wi th th e Gov ern m en t in ve st ig at io n. Targ et s u se d arm edgu ard s t o b reakin to th e whi st le bl owe r’s of fic e. Fi na ll y , th e Gov ern m en t o ffer edto pl ace t he whi st le bl owe r in to th e wit ne ss pr ot ect io n p ro gr am . W e fi ndth is factco m pe ll in g. Itde m on strat es th e cre di bi li ty of th e d eath thr eatan d the tru e ri skof s ev ere p hysic al harm to th e whi st le bl owe r.-9
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[* 9] The supp orti ng do cu m en ts als o d em on st rat e th attar ge ts ha ve en ga ge d i n a pa tt ernof h aras sm en t an d l it ig io us be ha vi orwith the go al of i nt im id at in g the whi st le bl owe r to rem ai n s il en t. Targ et s’ con du ctha s caus edth e whi st le bl owe r to sp en d s ig ni fic an t am ou nt s o f m on ey to de fen d a ga in stsev eral act io ns inm ul ti pl e fo ru m s an d t o h ire co un te rte rro ris m ex pe rts to pro te ctth e whi st le bl owe r an d the whi st le bl owe r’s fam il y . Add it io na ll y , tar ge ts ’ act io ns ag ai ns t the whi st le bl owe r ha ve cau se d d am ag e to th e whi st le bl owe r’s pr of es si on al rep ut at io n. Th e Co urt al so ag rees with the whi st le bl owe r th atth e fac ts inth is cas e are ve ry sp eci fic an d in vo lv e num ero us ev en ts th atwou ldbe reco gn iz ab le by targ et s an d i n turn, m ig ht
en ab le th em

to di sc ov er the whi st le bl owe r’s id en ti ty. Into to , we fin d the se fact s co m pe ll in g. Th e whi st le bl owe r ha s de m on st rat edth atth e whi st le bl owe r an d the whi st le bl owe r’s fam il y are at si gn ifi can t ri skof s ev ere p hysic al harm if the cas e d oe s n otrem ai n s eal ed . Targe ts ha ve sh own a pa tt ernof i nt im id at io n, ag gr es si on an d p hysic al th reat s o f ha rm to ward s the whi st le bl owe r. Thi s C ourt wi ll no t p la ce the whi st le bl owe r orth e whi st le bl owe r’s fam il y

injeop ardy

as t he re i s a s ub st an ti al ris k tha t i f th e rec or d i s no t s eal ed , tar ge ts wil l u nc ov er the whi st le bl owe r’s id en ti ty andsee k re tri bu ti on . W e m us t ev al ua te th is ris k o f ph y si cal harm ag ai ns t the publ ic in te res t i n acce ss to jud ic ia l re co rd s. See W arn er Co m m cn s., In c., 43 5 U.S. at60 2; Does I-1 0-

[* 10 ] ThruXXIII v . Adv an cedText il e Co rp ., 21 4 F .3d10 58 , 10 69 (9th C ir. 20 00 ); AT&T Co ., 59 4 F .2dat 5 96 ; Will ie Nels on Mu si c Co . v. Co m m is si on er, 8 5 T.C. at 9 19 . After c aref

ul co ns id erat io n o f th e al le ge d fa ct s o f th is cas e, we fi nd th atth e b al an ce fa vo rs th e whi st le bl owe r. The ri skof e xt rem e p hysic al harm to th e whi st le bl owe r an d the whi st le bl owe r’s fam il y ou twei gh s the co un te rv ai li ng publ ic in te res t fa vo rin g o pe n ju di ci al pro ceed in gs . Perm is si on To Pro ceedAno nym ou sl y The whi st le bl owe r ha s al so reque st edpe rm is si on to pro ceedan on ym ou sl y . Pro ceed in g ano nym ou sl y is ne ces sa ry

to pro te ctth e whi st le bl owe r’s pr of es si on al rep ut at io n, ec on om ic in te res ts an d p ers on al saf ety . Rec en tl y , th is Co urt ad op te d R ul e 3 45 to crea te a m ech an is m to pre se rv e th e an on y m ity of wh is tl eb lo wers an d n on -p arty tax pa y ers . W

hi st le bl owe rs see ki ng to pr oc eedan on ym ou sl y

m us t fi le a m ot io n wi th th is Co urt s et ti ng forth a su ffi ci en t, fact -s pe ci fic ba si s fo r an on ymity . Rul e 3 45 (a). Th e p et it io n andsubs eque nt fil in gs are t em

po rari ly seal edpe nd in g arul in g b y th e Co urt o n the m ot io n t o pr oc eedan on ym ou sl y . Id. A whi st le bl owe r is pe rm it te d t o p ro ceedan on ym ou sl y if t he whi st le bl owe r pr es en ts a su ffi ci en t s ho win g o f ha rm th atou twei gh s co un te rb al an ci ng so ci et al in te res ts inkn owi ng th e whi st le bl owe r’s id en ti ty. See Whi st le bl owe r 14 10 6- 10 W v. Co m m is si on er, 1 37 T.C. 18 3 (2 01 1) ; s ee al so Does I-1 1-

[* 11 ] ThruXXIII, 21 4 F .3dat 1 06 8. Th e d eci si on whet he r to all ow a p arty to pr oc eedan on ym ou sl y

res ts withi n the so un d d is cret io n o f th e tr ia l co urt. Ano nym ou s v . Comm is si on er, 1 27 T.C. at 9 4; see James v. J aco bs on , 6 F.3 d 2 33 , 23 8 (4 thCir . 19 93 ); s ee al so sec . 74 61 (b )(1 ). Thi s C ou rt h as gra nt eda m ot io n t o p ro ceedan on ym ou sl y wher e th e ta xp ay er fa ceda ri skof s ev ere p hysic al harm if the tax pa y er’s i de nt ity was rev eal ed . See An on ym ou s v . Comm is si on er, 1 27 T.C. at 9 4 (h ol di ng th atris k o f

“ se ve re p hysic al harm ” to tax pa y er an d fa m il y ou twei gh edth e g en eral publ ic in te res t i n kno win g t axpa y er’s i de nt ity). Mo reo ve r, th is Co urt h as grant eda whi st le bl owe r’s reque stto pro ceedan on ym ou sl y wher e th e whi st le bl owe r was su sc ep ti bl e to pro fes si on al st ig m a, ret al ia ti on an d e co no m ic du res s. See Whi st le bl owe r 14 01 6- 10 W v. Co m m is si on er, 1 37 T.C. at 2 03 -2 04 . The Co urt’s de ci si on s ar e co ns is te ntwith the IRS Whi st le bl owe r Offi ce g en eral adm in is tra ti ve pr act ic e o f ke ep in g wh is tl eb lo wers ’ id en ti ti es co nf id en ti al . See i d. at20 5. The whi st le bl owe r ha s s at is fie d the whi st le bl owe r’s factua l b ur de n t o pr oc eedan on ym ou sl y . The fac ts all eg edinth e p et it io n andth e aff id av itatt ach ed to th e m ot io n t o p ro ceedan on ym ou sl y de m on strat e th atdi sc lo su re o f th e whi st le bl owe r’s id en ti ty cou ldres ul t i n the ris k o f ret al ia ti on , so ci al an d-1 2-

[* 12 ] pr of

es si on al st ig m a an d e co no m ic du res s. Mo stim po rta nt ly, di sc lo sure o f 3 th e whi st le bl owe r’s id en ti ty w ou ldpl ace t he whi st le bl owe r an d the whi st le bl owe r’s fam il y

at r is k o f ph y si cal harm . Targe ts are al le ge d t o h av e ti es to te rro ris t o rg an iz at io ns an d h av e al read y us edarm edm ento rai d the whi st le bl owe r’s of

fic es . Mor eo ve r, targ et s p rev io us ly thre at en edth e whi st le bl owe r’s li fe. The Gov ern m en t’s co nc ernov er the in di vi du al s an d e nt it ie s in vo lv edpro m

pt editto off

er the whi st le bl owe r pl acement i n the witne ss pr ot ect io n p ro gr am . There is no be tt er ev id en ce o f th e cre di bi li ty of th e d eath th reatan d the real ris k tha t the whi st le bl owe r fac es if the whi st le bl owe r’s id en ti ty is rev eal ed . In s ho rt, the na tu re an d s ev eri ty of po te nt ia l h arm th atco ul d b efal l the whi st le bl owe r ou twei gh s the so ci et al in te res t i n kno win g the whi st le bl owe r’s id en ti ty. Fo r th e fo reg oi ng reas on s, we wi ll gra ntth e whi st le bl owe r’s m ot io n t o s eal
an d the whi st le bl owe r’s m ot io n t o p ro ceedan on ym ou sl y . An ap pr op ria te ord er wi ll be is su ed
.

Rev eal in g the whi st le bl owe r’s id en ti ty, al th ou gha se co nd ary co ns id erat io n 3 he re, co ul d a dv ers el y

affe ctth e whi st le bl owe r’s pr of es si on al rep ut at io n, cu rren t em pl oym en t an d fu ture em

pl oym en t o pp ortu ni ti es .