T.C. Memo. 2014-92

UNITED STATES TAX COURT

WHISTLEBLOWER 11332-13W, Petitioner v.

COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 11332-13W. Filed May 20, 2014.

Sealed, for petitioner.

Sealed, for respondent.

MEMORANDUM OPINION

KROUPA, Judge: This case is before the Court on the whistleblower’s

motion to seal and the whistleblower’s motion to proceed anonymously under
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[*2] Rule 345(a). The whistleblower has demonstrated that sealing the record is

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appropriate in this circumstance because failure to do so could result in severe

physical harm to the whistleblower. The whistleblower has also demonstrated that

proceeding anonymously is necessary to protect the whistleblower’s professional

reputation, economic interests and personal safety. We will grant both motions.

Background

The following information is stated only for purposes of resolving the

pending motions and not for purposes of establishing the validity of the

whistleblower’s claim. 

Petitioner is a whistleblower that reported a tax fraud scheme to the 

Government. During the whistleblower’s employment, the whistleblower learned

of a tax structure involving the whistleblower’s employer and several related

entities and subsidiary companies (targets). When the whistleblower raised

concerns over the tax structure to the whistleblower’s employer, the

whistleblower’s employer used physical force and armed men to intimidate the

The Court is issuing this Memorandum Opinion because there is a lack of 1

whistleblower caselaw.

All section references are to the Internal Revenue Code in effect for all 2

relevant times, and all Rule references are to the Tax Court Rules of Practice and

Procedure, unless otherwise indicated. All amounts are rounded to the nearest

dollar.
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[*3] whistleblower and prevent disclosure. The whistleblower was subsequently

fired. The whistleblower reported the tax scheme to the Government and for

several years assisted the Government in its investigation of targets. Based partly

on the whistleblower’s information, the Government eventually recovered more

than $30 million in taxes, penalties and interest. 

The whistleblower filed a Form 211, Application for Award for Original

Information, on February 4, 2008 and submitted to the IRS Whistleblower Office

(Whistleblower Office) documentary evidence related to the targets’ actions the

whistleblower disclosed. Subsequently, the whistleblower resubmitted Form 211

on August 12, 2011, seeking an award under section 7623(b). The Whistleblower

Office sent the whistleblower an award determination under section 7623(a). The

whistleblower filed the petition seeking judicial review of the Whistleblower

Office section 7623(a) award determination. 

Throughout the investigation Government investigators warned the

whistleblower that the targets and individuals the whistleblower reported were

dangerous and were linked to violent events and terrorist organizations. Indeed,

the whistleblower alleges that over the last 10 years at least one person who

reported alleged wrongdoing against one of the targets was killed under suspicious

circumstances. After learning that the whistleblower was subpoenaed to provide
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[*4] documents to the Government, targets filed multiple retaliatory actions

against the whistleblower to determine the whistleblower’s role in the

investigation and to silence the whistleblower. The whistleblower incurred

significant personal expense, spent time and suffered professional reputational

costs defending against these actions that were designed to intimidate and threaten

the whistleblower. 

The whistleblower has also received significant physical threats. The

whistleblower received a death threat from the targets, communicated through

their counsel. After learning of the individuals and entities involved, the

Government offered to place the whistleblower in the witness protection program. 

The whistleblower declined placement in the witness protection program, but

requested and was granted confidential informant status. The whistleblower was

also forced to hire counterterrorism experts to advise the whistleblower’s family

on safety and protect the whistleblower on trips abroad. This protection cost the

whistleblower tens of thousands of dollars. Despite their efforts, targets have not

discovered the identity of the whistleblower. They were aware only that the

whistleblower was subpoenaed by the Government. 
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[*5] The whistleblower filed the motion to seal and the motion to proceed

anonymously at the same time the whistleblower filed the petition. Respondent

filed notices of no objection to both motions. 

Discussion

We are asked to decide whether the docket record in this case should remain

sealed and whether the whistleblower should be permitted to proceed

anonymously. We begin by describing the general presumption of openness that

attaches to judicial proceedings. Generally, official records of all courts shall be

open and available to the public for inspection and copying. Nixon v. Warner

Commcns., Inc., 435 U.S. 589, 597 (1978); In re Coordinated Pretrial Proceedings

in Petroleum Prods. Antitrust Litig., 101 F.R.D. 34, 38 (C.D. Cal. 1984). Hearings

and the evidentiary record of proceedings before this Court shall be open to the

public. Secs. 7458, 7461(a). Common law, statutory law and the U.S.

Constitution all support this important principle. Warner Commcns., Inc., 435

U.S. at 597; Willie Nelson Music Co. v. Commissioner, 85 T.C. 914, 917 (1985);

In re Coordinated Pretrial Proceedings in Petroleum Prods. Antitrust Litig., 101

F.R.D. at 38. The right to inspect and copy judicial records, however, is not

absolute. Warner Commcns., Inc., 435 U.S. at 598. Courts have supervisory
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[*6] power over their own records and files and courts have denied access to

records where the court files might become a vehicle for improper purposes. Id. 

Sealing the Record

This Court has broad discretionary power to control and seal, if necessary,

records and files in our possession. Willie Nelson Music Co. v. Commissioner, 85

T.C. at 918. We may, in our discretion, seal the record or portions of the record if

justice so requires and the party seeking such relief demonstrates good cause. Sec.

7461(b)(1); Rule 103(a); AT&T Co. v. Grady, 594 F.2d 594, 596 (7th Cir. 1978);

Willie Nelson Music Co. v. Commissioner, 85 T.C. at 920; Tavano v.

Commissioner, T.C. Memo. 1991-237, aff’d, 986 F.2d 1389 (11th Cir. 1993). To

determine whether sealing the record is appropriate, we must weigh the

presumption, however gauged, in favor of public access to judicial records against

the interests advanced by the parties. Warner Commcns., Inc., 435 U.S. at 602;

AT&T Co. v. Grady, 594 F.2d at 596; Willie Nelson Music Co. v. Commissioner,

85 T.C. at 919.

Taxpayers seeking to seal court records must come forward with appropriate

testimony and factual data to show good cause. United States v. United Fruit Co.,

410 F.2d 553, 557 n.11 (5th Cir. 1969); Estate of Yaeger v. Commissioner, 92

T.C. 180, 189 (1989); Willie Nelson Music Co. v. Commissioner, 85 T.C. at 920
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[*7] (citing Wyatt v. Kaplan, 686 F.2d 276, 283 (5th Cir. 1982)); Tavano v.

Commissioner, T.C. Memo. 1991-237. Taxpayers may not rely on conclusory or

unsupported statements to establish claims of harm that would result from

disclosure. Willie Nelson Music Co. v. Commissioner, 85 T.C. at 920; In re

Coordinated Pretrial Proceedings in Petroleum Prods. Antitrust Litig., 101 F.R.D.

at 44. 

Good cause has been demonstrated and records have been sealed where

there is a demonstrated risk of physical harm to the taxpayer or the taxpayer’s

family. Anonymous v. Commissioner, 127 T.C. 89, 92-93 (2006). Good cause

has also been demonstrated where patents, trade secrets or confidential

information are involved or where an individual’s business reputation will be hurt. 

See In re Smith, 656 F.2d 1101 (5th Cir. 1981) (striking an individual’s name from

factual resumes on due process grounds as resumes were prepared in criminal

proceeding where the individual was not indicted); Crystal Grower’s Corp. v.

Dobbins, 616 F.2d 458 (10th Cir. 1980) (sealing portions of record involving

documents alleged to be subject to attorney-client privilege or work product

doctrine); In re Sarkar, 575 F.2d 870 (C.C.P.A. 1978) (sealing record involving

patent application proceeding so that the information would remain a trade secret

in the event of an adverse decision); Sendi v. Prudential-Bache Sec., 100 F.R.D.
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[*8] 21 (D.D.C. 1983) (sealing parties’ tax returns to protect confidentiality and

privacy interests). Merely asserting annoyance, embarrassment or harm to a

person’s personal reputation, however, is generally insufficient to demonstrate

good cause and overcome the strong common law presumption in favor of access

to court records. Willie Nelson Music Co. v. Commissioner, 85 T.C. at 921, 925

(record not sealed where nationally known entertainer sought to avoid public

scrutiny or news coverage of case); Tavano v. Commissioner, T.C. Memo.

1991-237 (record not sealed where taxpayer had civil suit pending against

employer and did not want employer to learn facts of case).

The whistleblower’s counsel submitted an affidavit that demonstrates the

severe degree of harm the whistleblower and the whistleblower’s family members

would risk if we do not seal the record. The affidavit and the petition demonstrate

several key facts. First, targets are linked to terrorist organizations. The

whistleblower received a death threat, communicated through targets’ counsel, in

connection with the whistleblower’s cooperation with the Government

investigation. Targets used armed guards to break into the whistleblower’s office. 

Finally, the Government offered to place the whistleblower into the witness

protection program. We find this fact compelling. It demonstrates the credibility

of the death threat and the true risk of severe physical harm to the whistleblower.
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[*9] The supporting documents also demonstrate that targets have engaged in a

pattern of harassment and litigious behavior with the goal of intimidating the

whistleblower to remain silent. Targets’ conduct has caused the whistleblower to

spend significant amounts of money to defend against several actions in multiple

forums and to hire counterterrorism experts to protect the whistleblower and the

whistleblower’s family. Additionally, targets’ actions against the whistleblower

have caused damage to the whistleblower’s professional reputation. The Court

also agrees with the whistleblower that the facts in this case are very specific and

involve numerous events that would be recognizable by targets and in turn, might

enable them to discover the whistleblower’s identity. 

In toto, we find these facts compelling. The whistleblower has

demonstrated that the whistleblower and the whistleblower’s family are at

significant risk of severe physical harm if the case does not remain sealed. Targets

have shown a pattern of intimidation, aggression and physical threats of harm

towards the whistleblower. This Court will not place the whistleblower or the

whistleblower’s family in jeopardy as there is a substantial risk that if the record is

not sealed, targets will uncover the whistleblower’s identity and seek retribution. 

We must evaluate this risk of physical harm against the public interest in

access to judicial records. See Warner Commcns., Inc., 435 U.S. at 602; Does I
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[*10] Thru XXIII v. Advanced Textile Corp., 214 F.3d 1058, 1069 (9th Cir.

2000); AT&T Co., 594 F.2d at 596; Willie Nelson Music Co. v. Commissioner, 85

T.C. at 919. After careful consideration of the alleged facts of this case, we find

that the balance favors the whistleblower. The risk of extreme physical harm to

the whistleblower and the whistleblower’s family outweighs the countervailing

public interest favoring open judicial proceedings.

Permission To Proceed Anonymously

The whistleblower has also requested permission to proceed anonymously. 

Proceeding anonymously is necessary to protect the whistleblower’s professional

reputation, economic interests and personal safety.

Recently, this Court adopted Rule 345 to create a mechanism to preserve the

anonymity of whistleblowers and non-party taxpayers. Whistleblowers seeking to

proceed anonymously must file a motion with this Court setting forth a sufficient,

fact-specific basis for anonymity. Rule 345(a). The petition and subsequent

filings are temporarily sealed pending a ruling by the Court on the motion to

proceed anonymously. Id. A whistleblower is permitted to proceed anonymously

if the whistleblower presents a sufficient showing of harm that outweighs

counterbalancing societal interests in knowing the whistleblower’s identity. See

Whistleblower 14106-10W v. Commissioner, 137 T.C. 183 (2011); see also Does I
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[*11] Thru XXIII, 214 F.3d at 1068. The decision whether to allow a party to

proceed anonymously rests within the sound discretion of the trial court. 

Anonymous v. Commissioner, 127 T.C. at 94; see James v. Jacobson, 6 F.3d 233,

238 (4th Cir. 1993); see also sec. 7461(b)(1). 

This Court has granted a motion to proceed anonymously where the

taxpayer faced a risk of severe physical harm if the taxpayer’s identity was

revealed. See Anonymous v. Commissioner, 127 T.C. at 94 (holding that risk of

“severe physical harm” to taxpayer and family outweighed the general public

interest in knowing taxpayer’s identity). Moreover, this Court has granted a

whistleblower’s request to proceed anonymously where the whistleblower was

susceptible to professional stigma, retaliation and economic duress. See

Whistleblower 14016-10W v. Commissioner, 137 T.C. at 203-204. The Court’s

decisions are consistent with the IRS Whistleblower Office general administrative

practice of keeping whistleblowers’ identities confidential. See id. at 205. 

The whistleblower has satisfied the whistleblower’s factual burden to

proceed anonymously. The facts alleged in the petition and the affidavit attached

to the motion to proceed anonymously demonstrate that disclosure of the

whistleblower’s identity could result in the risk of retaliation, social and
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[*12] professional stigma and economic duress. Most importantly, disclosure of

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the whistleblower’s identity would place the whistleblower and the

whistleblower’s family at risk of physical harm. Targets are alleged to have ties to

terrorist organizations and have already used armed men to raid the

whistleblower’s offices. Moreover, targets previously threatened the

whistleblower’s life. The Government’s concern over the individuals and entities

involved prompted it to offer the whistleblower placement in the witness

protection program. There is no better evidence of the credibility of the death

threat and the real risk that the whistleblower faces if the whistleblower’s identity

is revealed. In short, the nature and severity of potential harm that could befall the

whistleblower outweighs the societal interest in knowing the whistleblower’s

identity.

For the foregoing reasons, we will grant the whistleblower’s motion to seal

and the whistleblower’s motion to proceed anonymously. 

An appropriate order will be issued.

Revealing the whistleblower’s identity, although a secondary consideration

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here, could adversely affect the whistleblower’s professional reputation, current

employment and future employment opportunities.