internal_revenue_service number release date index number -------------------- ---------------------------- -------------------------------- ------------------------------- department of the treasury washington dc third party communication date of communication month dd yyyy person to contact -------------------------- id no ---------------- ----------------- telephone number ---------------------- refer reply to cc corp3 plr-133666-18 date date legend distributing ---------------------------- -------------------------------- ------------------------- state a state b date date date -------------- --------- ------- ------- ------- business a ------------------------------------- business b --------------------------------------------- partnership -------------------------------------- partner a fsub fsub fsub -------------------- ----------------------------------------- ----------------------------------- ------------------------------------------------------------------------------------------ ---------------------------------------------------------------------- ------------------------------------------------- ---------- ---------------- ---------- ------------------------------------- ------- plr-133666-18 fsub fsub sub jurisdiction a jurisdiction b jurisdiction c jurisdiction d a b c d e ---- ---- ---- ---- ---- dear ------------ this letter responds to your letter dated date as supplemented by subsequent submissions requesting rulings on certain federal_income_tax consequences of the proposed transaction as defined below the information provided in that letter and in subsequent correspondence is summarized below this letter is issued pursuant to revproc_2017_52 2017_41_irb_283 regarding one or more covered transactions under sec_355 and or sec_368 of the internal_revenue_code the code this office expresses no opinion as to any issue not specifically addressed by the rulings below the rulings contained in this letter are based on facts and representations submitted by the taxpayer and accompanied by a penalties of perjury statement executed by an appropriate party this office has not verified any of the materials submitted in support of the request for rulings verification of the information representations and other data may be required as part of the audit process plr-133666-18 this office has made no determination regarding whether the distribution as defined below i satisfies the business_purpose requirement of sec_1_355-2 ii is used primarily as a device for the distribution of the earnings_and_profits of the distributing_corporation or the controlled_corporation or both see sec_355 and sec_1_355-2 or iii is part of a plan or series of related transactions pursuant to which one or more persons will acquire directly or indirectly stock representing a 50-percent_or_greater_interest in the distributing_corporation or the controlled_corporation or any predecessor or successor of the distributing_corporation or the controlled_corporation within the meaning of sec_1_355-8t see sec_355 and sec_1_355-7 summary of facts distributing was formed on date as a state a corporation and has its principal_place_of_business in state b distributing is the common parent of an affiliated_group_of_corporations consisting of both domestic and foreign_corporations the group is engaged in both business a and business b each of which it has carried on for more than five years distributing has decided to separate business a from business b through the proposed transaction in which it will spin off business b in newly formed controlled distributing has the following corporate business purposes for completing the proposed transaction i it will improve distributing and controlled’s ability to use their capital stock as currency in future transactions ii it will provide cost savings through lower- cost access to capital for capital expenditures acquisitions and other business needs iii it will resolve management and systemic problems caused by the operation of business a and business b within a single affiliated_group iv it will allow for the alignment of incentive compensation of the respective management teams of the two businesses and v it will permit distributing and controlled to adopt strategies and objectives that are appropriate to the separate businesses given their different financial investment and operating characteristics return profiles and growth potentials distributing has a single class of stock outstanding partnership a state b limited_partnership holds a percent of shares an amount constituting control current and former employees of distributing hold the remaining b percent of shares which were issued through a stock incentive plan the partners directly and through trusts in partnership are six members of an extended family all partners are u s citizens partner a is the general_partner of partnership and also serves as chairperson and ceo of distributing as general_partner partner a votes all shares held by the partnership distributing wholly owns fsub which is a jurisdiction a limited_liability_company and fsub which is a jurisdiction b limited_liability_company fsub wholly owns fsub a jurisdiction c branch and fsub a jurisdiction c limited_liability_company plr-133666-18 distributing owns c percent of fsub a jurisdiction d partnership fsub and fsub are holding_companies with no operations fsub fsub and fsub are all involved in business b distributing formed fsub as a joint_venture with an unrelated party on date at the same time it contributed all of its directly held businesses to sub a wholly owned domestic subsidiary on date having determined that it was unnecessary to operate its businesses through sub rather than directly distributing liquidated sub both business a and business b presently have substantial cash holdings cash and cash equivalents currently account for approximately d percent of business a’s assets and approximately e percent of business b’s assets distributing hopes to use at least some of these cash reserves for certain capital projects or to have entered into binding contracts for such capital projects before the proposed transaction prior to the proposed transaction if any cash remains that has not yet been dedicated to capital expenditures under a binding agreement distributing will declare a sufficiently large cash dividend to its shareholders so that the nonbusiness_asset percentage of each of distributing and controlled will be below percent following the distribution of the dividend distributing has a number of outstanding liabilities in the proposed transaction controlled will assume the liabilities associated with business b and with business b’s property and employees none of these liabilities is evidenced by a debt_instrument controlled therefore will not assume liability for any distributing debt within the meaning of revproc_2018_53 sec_3 2018_43_irb_667 following the proposed transaction distributing will have certain continuing business relationships with controlled all such relationships will be based on arm’s-length terms and conditions specifically distributing and controlled will enter into employment agreements that address issues associated with the employment of distributing and controlled employees and other matters relating to employee benefit plans agreements and arrangements some of these services and employees will be shared by distributing and controlled these relationships will be short-term in nature and are expected to terminate within_12_months after the distribution also for up to months after the distribution employees of distributing will continue to provide accounting human resource legal and treasury services to controlled and employees of controlled will provide it and research_and_development services to distributing during this period distributing and controlled will be assembling their own resources to handle these services after the 12-month_period no services will be shared between distributing and controlled and distributing and controlled will have no further transactions aside from purchases of each other’s publicly available services and products at the prices charged to unrelated customers plr-133666-18 the proposed transaction to achieve the business purposes described above the following series of steps is proposed distributing will form controlled a new state a corporation in exchange for controlled stock distributing will contribute to controlled all of the assets of business b including all of its interests in fsub fsub and fsub and controlled will assume the liabilities of business b the contribution following the contribution distributing will distribute all of the controlled stock to its shareholders the distributees pro_rata with each shareholder receiving one share of controlled stock for each share of distributing stock held by such shareholder the distribution after the distribution partner a will serve as chairperson and ceo of controlled as well as a director of distributing partner a will be the only overlapping board member two of the five remaining current directors of distributing will continue to serve as directors of distributing the remaining three will serve as directors of controlled distributing will begin a search for a new ceo and chairperson representations with respect to the distribution except as otherwise set forth below distributing has made all of the representations in sec_3 of the appendix to revproc_2017_52 2017_41_irb_283 distributing has made the following alternative representations representation sec_3 a a a a a a distributing has not made the following representations which do not apply to the proposed transaction representations rulings based solely on the information submitted and the representations set forth above we rule as follows plr-133666-18 the contribution followed by the distribution will qualify as a reorganization under sec_368 and distributing and controlled will each be a_party_to_a_reorganization within the meaning of sec_368 no gain_or_loss will be recognized by distributing on the contribution sec_361 and sec_357 no gain_or_loss will be recognized by controlled on the contribution sec_1032 controlled’s basis in each asset including each stock interest received from distributing in the contribution will be the same as the basis of such asset in the hands of distributing immediately before the contribution sec_362 controlled’s holding_period for each asset received from distributing in the contribution will include the period during which distributing held that asset sec_1223 no gain_or_loss will be recognized by distributing on the distribution sec_361 no gain_or_loss will be recognized by and no amount will otherwise be included in the income of any distributee upon receipt of controlled stock in the distribution sec_355 the aggregate basis of the distributing shares and the controlled shares in the hands of each distributee immediately after the distribution will equal the aggregate basis of the distributing shares held by the distributee immediately before the distribution allocated between the shares of distributing and controlled in proportion to the fair_market_value of each immediately following the distribution in accordance with sec_1_358-2 sec_358 and c the holding_period of the controlled shares received by each distributee in the distribution will include the holding_period of the distributing shares on which the distribution is made provided the distributing shares are held by the shareholder as a capital_asset on the date of the distribution sec_1223 earnings_and_profits if any will be allocated between distributing and controlled in accordance with sec_312 and sec_1_312-10 caveats except as expressly provided herein no opinion is expressed or implied concerning the tax treatment of the proposed transaction under any provision of the code and plr-133666-18 regulations or the tax treatment of any condition existing at the time of or effects resulting from the proposed transaction that is not specifically addressed by this letter procedural statements this ruling is directed only to the taxpayer requesting it sec_6110 of the code provides that it may not be used or cited as precedent a copy of this letter should be attached to the federal_income_tax return of each taxpayer involved for the taxable_year in which the transaction covered by this ruling letter is consummated alternatively taxpayers filing their returns electronically may satisfy this requirement by attaching a statement to their return that provides the date and control number of this letter_ruling in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representative sincerely __________________________________ mark s jennings senior technician reviewer branch office of associate chief_counsel corporate cc


whistleblower 14106-10w petitioner v commissioner of internal revenue respondent docket no 14106-10w filed date p a former senior executive of x filed a claim for a whistle- blower award under sec_7623 i r c alleging that x had underpaid its taxes r investigated p’s claim but did not open an administrative or judicial proceeding against x and did not collect any additional tax from x on the basis of p’s informa- tion r denied p’s claim on the basis that an award deter- mination could not be made under sec_7623 i r c p’s identity thus far has been kept confidential asserting that disclosing p’s identity in this judicial proceeding would result verdate 0ct jun jkt po frm fmt sfmt v files whistle sheila united_states tax_court reports in retaliation and professional ostracism p filed a motion for a protective_order requesting that the record be sealed or alternatively that p be granted anonymity while p’s motion for a protective_order was pending r filed a motion for sum- mary judgment p opposes r’s motion on the grounds that it is premature because p’s motion for a protective_order is pending and discovery has not commenced held summary_judgment may properly be rendered even though a motion for a protective_order is pending and discovery has not com- menced held further because p failed to meet the threshold requirements for a whistleblower award r’s motion for sum- mary 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 granted held further the par- ties 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 anonymity and redacting identifying information adequately protect p’s legiti- mate privacy interests as a confidential informant p’s request to seal the record will be denied lll for petitioner david a ingold and ruth mary spadaro for respondent opinion thornton judge this is an action pursuant to sec_7623 to review respondent’s denial of petitioner’s claim for a whistleblower award this matter is before the court on respondent’s motion for summary_judgment and peti- tioner’s motion to seal the record and proceed anonymously petitioner’s whistleblower claim background on date petitioner submitted to the internal_revenue_service whistleblower office whistleblower office form_211 application_for award for original information this submission indicated 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 under- the name of petitioner’s counsel has been omitted in furtherance of protecting petitioner’s identity unless otherwise noted all section references are to the internal_revenue_code as amended and all rule references are to the tax_court rules_of_practice and procedure verdate 0ct jun jkt po frm fmt sfmt v files whistle sheila whistleblower 14106-10w v commissioner paying its federal_income_tax by a substantial amount by letter dated date respondent acknowledged receipt of petitioner’s claim after various written communications between the parties by letter to petitioner dated date the whistle- blower office advised that petitioner did not qualify for an award because the submitted information did not identify a federal tax issue upon which the internal_revenue_service irs would take action and therefore did not lead to the detection of an underpayment_of_tax for which an award could be made under sec_7623 petitioner timely peti- tioned this court pursuant to sec_7623 petitioner’s motion for a protective_order petitioner also filed along with the petition a motion to seal identity case and accompanying documents sometimes referred to hereinafter as petitioner’s motion for a protective_order the court temporarily sealed the record and after receiving respondent’s response and petitioner’s supplements to the motion held a hearing on petitioner’s motion at the hearing petitioner’s counsel clarified that petitioner sought to have the record sealed or alternatively sought permission to proceed anonymously petitioner submitted an affidavit alleging the basis in support of the motion to seal or proceed anonymously according to the affidavit while employed at x petitioner became aware of the alleged tax underpayment referenced in petitioner’s application_for a whistleblower award petitioner submitted the whistleblower claim to the irs petitioner’s identity as a whistleblower has been kept confidential throughout the administrative proceedings and thus far in this judicial action at some point after filing the whistleblower claim peti- tioner obtained new employment 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 potential employers will not want to hire or employ a known tax whistleblower petitioner also asserts that x may suffer financially if the details of petitioner’s claim are made public without objection petitioner’s affidavit was received into evidence as petitioner’s testimony verdate 0ct jun jkt po frm fmt sfmt v files whistle sheila united_states tax_court reports respondent’s motion for summary_judgment on date while petitioner’s motion for a protective_order was still pending respondent filed a motion for sum- mary judgment on date petitioner filed an opposi- tion to the granting of respondent’s motion for summary_judgment neither party has requested a hearing on respond- ent’s motion for summary_judgment and we conclude that none is necessary discussion i background judicial review of tax whistleblower claims since the secretary has had legal authority to make discretionary payments for information that aids in detecting tax underpayments and fraud see history of the whistle- blower informant program http www irs gov compliance article id html in congress substantially amended the whistleblower program by enacting sec_7623 under this provision if the secretary proceeds with any administrative or judicial action on the basis of information provided by a whistleblower then subject_to var- ious conditions the whistleblower shall be entitled to an award of to percent of the collected_proceeds sec_7623 see also 135_tc_70 before there was no express statutory provision for judicial review of tax whistleblower claims see 96_fedclaims_633 stating that the pre-2006 tax whistleblower law cannot serve as the sub- stantive law on which to predicate jurisdiction of the court of federal claims this situation changed with the enact- ment of sec_7623 which provides that the tax_court the pre-2006 version of the tax whistleblower law former sec_7623 survives with minor changes as sec_7623 to qualify for an award under sec_7623 the tax penalties interest additions to tax and additional_amounts in dispute must exceed dollar_figure million sec_7623 additionally if the subject of the whistleblower claim is an individual the subject’s gross_income must exceed dollar_figure for the year at issue sec_7623 judicial review of claims arising under the pre-2006 version of sec_7623 has been confined to contractual claims brought under the tucker act u s c sec_1491 supp in limited circumstances where the informant and the irs had entered into a binding agreement by negotiating and fixing a specific amount for a whistleblower award see eg 846_f2d_725 fed cir 96_fedclaims_633 verdate 0ct jun jkt po frm fmt sfmt v files whistle sheila whistleblower 14106-10w v commissioner shall have jurisdiction with respect to any determination regarding an award under sec_7623 or see 82_fedclaims_549 holding that claims under sec_7623 are within the exclusive jurisdiction of the tax_court this court has held that pursuant to sec_7623 a letter from the whistle- blower office denying a claim on the grounds that no award_determination could be made under sec_7623 con- stitutes a determination conferring jurisdiction on this court cooper v commissioner supra pincite ii respondent’s motion for summary_judgment we may grant summary_judgment if there is no genuine issue as to any material fact and a decision may be rendered as a matter of law rule b see 98_tc_518 affd 17_f3d_965 7th cir 90_tc_753 the moving party bears the burden of proving that there is no genuine issue of material fact and factual inferences will be read in a manner most favorable to the party opposing summary_judgment 85_tc_812 79_tc_340 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 facts showing that there is a genuine issue for trial rule d if the adverse_party does not so respond then a decision may be entered against such party id respondent asserts that he is entitled to summary judg- ment because petitioner does not meet the threshold require- ments for an award under sec_7623 along with his motion for summary_judgment respondent filed the affidavit of chief_counsel attorney david a ingold declaring on the basis of his review of respondent’s administrative and legal files and on the basis of conversations with relevant irs per- sonnel 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 interest or penalty petitioner’s opposition does not address the substantive merits of respondent’s motion for summary_judgment but verdate 0ct jun jkt po frm fmt sfmt v files whistle sheila united_states tax_court reports suggests that respondent’s motion is premature because peti- tioner’s motion for a protective_order is still pending and because formal discovery has not yet commenced we dis- agree that respondent’s motion for summary_judgment is pre- mature pursuant to rule a a party may move for sum- mary judgment at any time commencing days after the pleadings are closed but within such time as not to delay the trial and pursuant to rule b the court may grant summary_judgment if the pleadings answers to interrog- atories depositions admissions and other acceptable mate- rials 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 peti- tioner’s motion for a protective_order is immaterial to respondent’s filing or the court’s ruling upon the motion for summary_judgment contrary to rule 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 e has petitioner otherwise made any showing that the facts set forth in mr ingold’s affidavit are genuinely dis- puted rule e is modeled in large part after former rule f of the federal rules of civil procedure redesignated rule d in with nonsubstantive changes in 866_f2d_1386 fed cir applying former rule f the court held that the plaintiff could not avoid summary_judgment by requesting discovery the court characterized the plaintiff ’s opposition as saying in effect we have no factual basis for opposing summary_judgment but if you stay proceedings we might find some- thing id pincite the court observed if all one had to do to obtain a grant of a rule f motion were to allege posses- sion by movant of ‘certain information’ and ‘other evidence’ rule e provides when affidavits are unavailable if it appears from the affidavits of a party opposing the mo- tion for summary_judgment that such party cannot for reasons stated present by affidavit facts essential to justify such party’s opposition then the court may deny the motion or may order a continuance to permit affidavits to be obtained or other steps to be taken or may make such other order as is just if it appears from the affidavits of a party opposing the motion that such party’s only legally available method of contravening the facts set forth in the supporting affida- vits of the moving party is through cross-examination of such affiants or the testimony of third parties from whom affidavits cannot be secured then such a showing may be deemed sufficient to establish that the facts set forth in such supporting affidavits are genuinely disputed verdate 0ct jun jkt po frm fmt sfmt v files whistle sheila whistleblower 14106-10w v commissioner every summary_judgment decision would have to be delayed while the non-movant goes fishing in the movant’s files id for similar reasons summary_judgment for respondent is not inappropriate simply because petitioner has not commenced discovery on the substantive merits of respondent’s motion for sum- mary judgment 136_tc_597 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 entitled to summary_judgment as this court stated under sec_7623 a whistleblower award is dependent upon both the initiation of an adminis- trative or judicial action and collection of tax proceeds id pincite if the secretary does not proceed there can be no whistleblower award id pincite according to the affidavit filed in support of respondent’s motion for summary judg- ment these preconditions for an award have not been met consequently we shall grant respondent’s motion for sum- mary judgment iii petitioner’s motion for a protective_order although we have held that respondent is entitled to sum- mary judgment we still need to rule on petitioner’s motion for a protective_order since our ruling will affect any further proceedings in this case and will govern future public access to information in the record petitioner’s request to seal the record or alternatively to proceed anonymously presents novel issues of balancing the public’s interests in open court proceedings against petitioner’s privacy interests as a con- fidential informant a openness of court proceedings this country has a long tradition of open trials and public access to court records this tradition is embedded in the common_law the statutory law and the u s constitution see 435_us_589 89_f3d_897 d c cir willie nelson music co v verdate 0ct jun jkt po frm fmt sfmt v files whistle sheila united_states tax_court reports commissioner 85_tc_914 open trials and public access to court records promote fairness and the search for truth help enlighten public opinion and assure confidence in the judicial process see 448_us_555 443_us_368 but the right to access has never been considered absolute to the contrary courts always have asserted the power to seal their records when deemed necessary 551_f2d_1252 d c cir revd on other grounds sub nom nixon v warner commcns inc supra judicial records consistent with these principles sec_7458 provides that hearings before the tax_court shall be open to the public and sec_7461 provides generally that all reports of the tax_court and all evidence received by the tax_court shall be public records open to the inspection of the public but the tax_court is authorized to make any provi- sion which is necessary to prevent the disclosure of trade secrets or other confidential information including a provi- sion that any document or information be placed under seal to be opened only as directed by the court sec_7461 under rule 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 annoyance embarrassment oppression or undue burden or expense including but not limited to an order that a trade secret or other information not be dis- closed or be disclosed only 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 posses- sion see 127_tc_89 willie nelson music co v commissioner supra pincite in addition where appropriate this court may permit the supreme court has held that there is a guaranteed right of the public under the first amendment to attend criminal trials see 448_us_555 but has not expressly ruled on whether there is a first amendment right of access to civil proceedings and documents the courts of appeals that have addressed the issue agree that there is such a constitutional right see eg 435_f3d_110 2d cir 846_f2d_249 4th cir 733_f2d_1059 3d cir 732_f2d_1302 7th cir 710_f2d_1165 6th cir verdate 0ct jun jkt po frm fmt sfmt v files whistle sheila whistleblower 14106-10w v commissioner a petitioner to proceed anonymously anonymous v commis- sioner supra pincite sec_7623 does not expressly address privacy interests of tax whistleblowers or other affected persons when it promulgated title xxxiii of its rules_of_practice and proce- dure relating to tax whistleblower actions this court observed that in appropriate cases it might permit a peti- tioner to proceed anonymously and might seal the record in that case explanatory note to rule 130_tc_586 the court stated that it contemplated that generally applicable statutory provisions rule 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 to proceed anonymously do provide authority for the court to allow a petitioner to proceed anony- mously and to seal the record when appropriate in whistleblower actions id b considering the less drastic option first petitioner has requested in the first instance that we seal the record and alternatively that we permit petitioner to proceed anonymously before granting a request to seal the record however it is appropriate to consider the less drastic option of permitting the requesting party to proceed anony- mously 855_f2d_178 4th cir see 951_f2d_1268 d c cir stating that if the trial_court determines that some type of sealing order is warranted it should be no broader than is nec- in the senate passed a bill with this provision that would have authorized the tax_court in new sec_7623 to seal portions of the record in tax whistleblower cases publicity of appeals-notwithstanding sec_7458 and sec_7461 the tax_court may in order to preserve the anonymity privacy or confidentiality of any person under this subsection pro- vide by rules adopted under sec_7453 that portions of filings hearings testimony evidence and reports in connection with proceedings under this subsection may be closed to the public or inspection by the public u s troop readiness veterans’ health and iraq accountability act h_r 110th cong sec_543 as passed by senate date this provision which ultimately was not enacted is substantially identical to sec_6110 see infra note the judicial conference of the united_states has recently adopted a national policy that encourages federal courts to seal entire civil case files only when sealing is required by statute or rule or justified by a showing of extraordinary circumstances and the absence of narrower feasible and effective alternatives such as sealing discrete documents or redacting information so that sealing an entire case file is a last resort news_release administrative office of the u s courts conference approves standards procedures for sealing civil cases date available at http www uscourts gov news newsview con- ferencelapproveslstandardslprocedureslforlsealinglcivill cases aspx verdate 0ct jun jkt po frm fmt sfmt v files whistle sheila united_states tax_court reports essary to protect those specific interests identified as in need of protection 585_fsupp2d_83 d d c concluding that protecting an informant’s identity did not require sealing of documents but could be accomplished through the redaction of the informant’s name permitting a litigant to proceed anonymously unlike sealing the record preserves in large measure the public’s ability to scrutinize judicial functioning since party anonymity does not obstruct the public’s view of the issues joined or the court’s performance in resolving them 653_f2d_180 5th cir c petitioner’s request for anonymity general considerations a party may generally proceed anonymously when the trial_court reasonably determines that the need for anonymity outweighs the prejudice to the opposing party and the general presumption that the parties’ identities are public information anonymous v commissioner supra pincite the decision whether to allow a party to proceed anony- mously rests within the sound discretion of the trial_court id see 6_f3d_233 4th cir see also sec_7461 in rare instances this court has permitted taxpayers in deficiency cases to proceed anonymously upon finding that the need for anonymity outweighed prejudice to the opposing party and the general presumption that the parties’ identi- ties are public information see anonymous v commis- sioner supra pincite anonymous v commissioner tcmemo_2010_87 in these deficiency cases the taxpayers dem- onstrated risks of severe physical harm if their identities were revealed no court has previously considered the cir- cumstances under which tax whistleblower suits under sec_7623 may be prosecuted anonymously consequently we shall consider in some detail the various factors that courts have applied in determining whether litigation should proceed anonymously or pseudonymously under rule promulgated pursuant to sec_6110 petitioners and intervenors may also proceed anonymously if appropriate in disclosure actions in the tax_court see eg anon- ymous v commissioner 134_tc_13 the records in disclosure actions are generally sealed pursuant to rule promulgated pursuant to sec_6110 verdate 0ct jun jkt po frm fmt sfmt v files whistle sheila whistleblower 14106-10w v commissioner seven courts of appeals have adopted or endorsed multi- factor tests to govern the trial court’s exercise of discretion in determining whether litigation should be permitted to pro- ceed anonymously or pseudonymously see 620_f3d_170 3d cir vacated and remanded on other ground sec_563 u s ll 131_sct_2958 sealed plaintiff v 537_f3d_185 2d cir 370_f3d_558 6th cir 214_f3d_1058 9th cir 139_f3d_798 10th cir james v jacobson supra pincite 951_f2d_320 11th cir doe v stegall supra pincite see also anonymous v commis- sioner t c pincite relatively recently the court_of_appeals for the second circuit canvassed the caselaw to compile what that court described as a non-exhaustive list of factors that a trial_court should consider in balancing a litigant’s interest in anonymity against the public interest in disclosure and any prejudice to the opposing party whether the litigation involves matters that are highly sensitive and of a personal nature whether identification poses a risk of retalia- tory physical or mental harm to the party seeking to proceed anony- mously or even more critically to innocent non-parties whether identification presents other harms and the likely severity of those harms including whether the injury litigated against would be incurred as a result of the disclosure of the plaintiff ’s identity whether the plaintiff is particularly vulnerable to the possible harms of disclosure particularly in light of his age whether the suit is challenging the actions of the government or that of private parties whether the defendant is preju- diced by allowing the plaintiff to press his claims anonymously whether the nature of that prejudice if any differs at any particular stage of the litigation and whether any prejudice can be mitigated by the district any appeal of this case would likely lie with the court_of_appeals for the d c circuit see sec_7482 flush language that court like the supreme court has not expressly addressed the propriety of pseudonymous or anonymous litigation although on occasion these courts have permitted without comment pseudonymous litigation to proceed see eg 410_us_113 938_f2d_1370 d c cir 820_f2d_1275 d c cir in 228_frd_8 d d c writing for the district_court judge lamberth observed that neither the court_of_appeals for the d c circuit nor the u s district_court for the district of columbia had tackled the propriety of pseudonymous litigation head on he indicated that the district_court had developed an ad-hoc process whereby the chief_judge may grant leave to file a complaint under a pseudonym if the requesting litigant makes a colorable argument in support of the request and that this process serves to get the case moving quickly leaving the issue open to full adverse litigation at a later date id verdate 0ct jun jkt po frm fmt sfmt v files whistle sheila united_states tax_court reports court whether the plaintiff ’s identity has thus far been kept confiden- tial whether the public’s interest in the litigation is furthered by requiring the plaintiff to disclose his identity whether because of the purely legal nature of the issues presented or otherwise there is an atypi- cally weak public interest in knowing the litigants’ identities and whether there are any alternative mechanisms for protecting the confiden- tiality of the plaintiff sealed plaintiff v sealed defendant supra pincite citations omitted as another court has aptly noted the multiplicity of factors to be considered suggests the breadth of the discretion to be exercised 241_frd_154 n s d n y to a significant degree these various factors are inter- mingled and overlapping for instance the first three factors listed above address collectively the single most important consideration- the bases upon which disclosure is feared or sought to be avoided and the substantiality of these bases 496_fsupp2d_477 m d pa and cases cited thereat affd in part and vacated in part on other grounds 620_f3d_170 3d cir vacated and remanded u s ll 131_sct_2958 that consideration is influenced in turn by whether the party seeking protection is particularly vulnerable factor and whether the party’s confidentiality has thus far been main- tained factor and the sufficiency of the basis asserted for anonymity also implicates societal interests factors and inasmuch as it depends on whether there is a ‘strong social interest in concealing the identity of the plaintiff ’ 62_fedclaims_521 quoting 89_frd_158 n d cal revd and remanded on other grounds 559_f3d_1228 fed cir an additional factor sometimes mentioned by courts but not expressly included in this factor list although it might be thought to inhere in some of the listed factors is whether either the party seeking anonymity or the opposing party is motivated by illegitimate motives see eg 496_fsupp2d_477 m d pa suggesting that plain- tiffs’ request to proceed anonymously might be considered to be improperly motivated if they sought anonymity to engage in a shell game and substitute different anonymous plaintiffs but also suggesting that seeking to intimidate plaintiffs in a manner that would discourage them from exercising their rights would be an illegitimate motive for opposing anonymity vacated in part on other grounds 620_f3d_170 3d cir vacated and remanded u s ll 131_sct_2958 176_frd_464 e d pa stating that improper reasons for seeking anonymity include gaining a tactical advan- tage impairing the opposing party’s ability to defend itself delaying litigation and increasing costs to the opposing party further illustrating the interrelatedness of factors one court has observed that the consid- eration of whether the suit is challenging the actions of the government or private individuals verdate 0ct jun jkt po frm fmt sfmt v files whistle sheila whistleblower 14106-10w v commissioner considering the multiplicity and interrelatedness of factors to be considered and the breadth of the trial court’s discre- tion in considering them it is unsurprising that litigants have been permitted to proceed anonymously in a wide variety of cases a highly sensitive personal information plaintiffs are often permitted to proceed anonymously in cases involving highly personal or sensitive matters such as reproductive rights sexual orientation or victimization and health conditions including mental illness the disclosure of which might lead to stigmatization or ostracism in such cases no particularized showing of other specific harm is necessarily required see eg sealed plaintiff v 537_f3d_185 2d cir physical and sexual assault 253_f3d_678 11th cir abortion 812_f2d_738 n d c cir the district_court granted plaintiff permission to file his complaint under a pseudonym because of the air force’s belief that he is homo- sexual doe v penzato no 10-cv-05154-mej n d cal date granting motion for protective_order sexual battery human trafficking and forced labor 237_frd_545 d n j bipolar disorder the court noted a theoretical possibility that awareness of the illness would result in damage to the plaintiff ’s professional reputation 213_frd_108 e d n y hepatitis b from blood transfusion although plaintiff has made no particularized showing of any specific harm or stigma to her caused by prosecuting the case under her own name plaintiff ’s privacy concerns appear to be substantial ones b physical harm another category of cases in which plaintiffs are often allowed to proceed anonymously involves situations in which disclosure of identity is deemed to pose a credible risk of physical harm see eg doe v stegall f 2d pincite factor listed above addresses primarily the potential prejudice and unfairness to private indi- viduals in being sued by anonymous individuals see factor 951_f2d_320 11th cir verdate 0ct jun jkt po frm fmt sfmt v files whistle sheila united_states tax_court reports plaintiffs faced possible physical harm because of their espousal of unpopular religious views 655_f2d_920 9th cir disclosure of prison inmate’s identity posed a risk of serious bodily harm anonymous v commissioner t c pincite in tax defi- ciency case risk of severe physical harm to the taxpayer and family outweighed the general_public interest in knowing the taxpayer’s identity doe v u s witness prot program ct_cl denying motion to dismiss disclosure of identities of individuals in witness protection program posed risk of danger and risk of serious harm c other significant harm there are also diverse cases in which courts have allowed litigants to proceed anonymously or pseudonymously to pro- tect them against other harms that are deemed to be suffi- ciently severe sealed plaintiff v sealed defendant supra pincite in these cases the courts have protected social psycho- logical and economic interests they have not always demanded proof of threats to the plaintiff ’s physical security nor have they always required threats to privacy rights steinman public trial pseudonymous parties when should litigants be permitted to keep their identities con- fidential hastings l j fn ref omitted i social or professional stigma some cases grant anonymity in large part because of the threat of social or professional stigma to such diverse liti- gants as attorneys and doctors suing to enjoin disciplinary proceedings a job applicant suing to protect her reputa- tion public aid recipients and a corporate defendant sued by insiders sometimes the risk of stigma is height- see eg 415_fsupp_308 n n d cal noting that the plaintiff attorney had been permitted to maintain his anonymity because of the possible ad- verse impact on his reputation affd 582_f2d_25 9th cir see eg 483_fsupp_539 s d n y unsuccessful job applicant for white house fellowship suing with respect to derogatory and prejudicial allega- tions in her file see eg 515_fsupp_1239 d d c social_security income applicant permitted to sue anonymously to compel promulgation of regulations to protect sen- sitive personal information and to shield her from feared abuse and harassment from her neigh- bors the media and the public see 709_f2d_1043 n 5th cir noting with apparent approval that the district_court had granted pseudonymity to prevent identification of the company and the possible disclosure of confidential information concerning its affairs verdate 0ct jun jkt po frm fmt sfmt v files whistle sheila whistleblower 14106-10w v commissioner ened because the party seeking anonymity belongs to a particularly vulnerable group such as juveniles or illegal immigrants ii economic retaliatory harm some cases permit litigants to proceed anonymously or pseudonymously to protect them against possible economic retaliatory harm for instance the court_of_appeals for the ninth circuit concluded that extraordinary economic harm justified allowing chinese workers employed in the mariana islands to proceed pseudonymously in their suit brought under the fair labor standards act of flsa ch 52_stat_1060 current version pincite u s c secs does i thru xxiii v advanced textile corp f 3d pincite the court_of_appeals contrasted the extreme nature of the retaliation faced by these workers which included termination of employment deportation and pos- sible arrest upon their return to china with the con- sequences faced by typical flsa plaintiffs stating while threats of termination and blacklisting are perhaps typical methods by which employers retaliate against employees who assert their legal rights the consequences of this ordinary retaliation to plaintiffs are extraordinary id pincite see also 60_frd_106 n d ohio permitting flsa plaintiff employees to proceed anonymously in order to safeguard against any possible reprisals by their employers that might result from the filing of this lawsuit but see s methodist univ association of women law students v wynne jaffe 599_f2d_707 5th cir denying anonymity for women lawyers who had joined a title vii sex discrimination suit against two law firms see eg 385_fsupp_902 d ariz juvenile delinquent’s identity protected because these are juvenile proceedings see eg lozano v city of hazleton f_supp 2d pincite the highly legal nature of the issues here combined with the intense public interest and strong level of emotion connected with the issue mean that the undocumented immigrants who seek to participate in this action face extraordinary circumstances that require anonymity if they hope to proceed without facing unsupportable burdens the holding in s methodist univ association of women law students v wynne jaffe 599_f2d_707 5th cir appears predicated partly on the court’s statement that one characteristic common to all cases affording plaintiffs anonymity was that the plaintiffs di- vulged personal information of the utmost intimacy two years later the court_of_appeals clari- fied that its opinion in s methodist univ association of women law students did not purport continued verdate 0ct jun jkt po frm fmt sfmt v files whistle sheila united_states tax_court reports in does i thru xxiii v advanced textile corp supra pincite the court_of_appeals held that in evaluating the severity of potential retaliatory action the trial_court should take into consideration among other factors the severity of the threatened harm the reasonableness of the party’s fears and the party’s vulnerability to harm applying this test the court of federal claims permitted native american plain- tiffs to proceed anonymously in a tucker act proceeding that pitted their personal interests against the interests of the communities of which they were members wolfchild v united_states fed cl pincite citing the plaintiffs’ risk of economic harm through the loss of per capita payments and their risk of losing membership in their communities if their identities were disclosed the court found that the threatened harm was sufficiently severe to justify their request for anonymity id pincite the court also noted that letting these plaintiffs proceed anonymously accorded with the practice of the bureau of indian affairs to provide anonymity for native americans in membership disputes with their communities id pincite in so-called qui tam actions arising under the false claims act u s c secs plaintiffs sometimes seek to protect their identities on the basis of feared retalia- tory harm the results have been mixed compare 492_fsupp2d_561 e d va in a qui tam suit against the plaintiff ’s former employer denying a request to seal the complaint or to grant anonymity because although fear of retaliation is not entirely implausible it is certainly vague and hypothetical at best and united_states v bon secours to establish the utmost intimacy consideration as a prerequisite to bringing an anonymous suit 653_f2d_180 5th cir permitting child plaintiffs to proceed anonymously in action challenging constitutionality of religious observances in public schools the court indicated that there was no hard and fast formula for ascertaining whether a party may sue anonymously but that the decision requires a balancing of considerations calling for maintenance of a party’s privacy against the customary and constitutionally-embedded presump- tion of openness in judicial proceedings id pincite qui tam is shorthand for the latin expression qui tam pro domino rege quam pro_se ipso in hac parte sequitur meaning who as well for the king as for himself sues in this matter black’s law dictionary 9th ed private individuals may bring qui tam actions on behalf of the united_states to recover damages against persons who have submitted false or fraudulent claims to the government id such an action allows the plaintiff to recover a portion of any money recovered by the government in the action u s c sec d by stat- ute a qui tam complaint remains under seal for at least days after it is filed id sec b verdate 0ct jun jkt po frm fmt sfmt v files whistle sheila whistleblower 14106-10w v commissioner cottage health servs 665_fsupp2d_782 e d mich denying a qui tam plaintiff ’s request to maintain the seal in the case or alternatively to redact identifying information from the record concluding that the plaintiff ’s fear of retalia- tion by her current or future employers was insufficient to overcome the strong presumption favoring public access to judicial records with united_states ex rel doe v boston sci- entific corp no 07-cv-2467 s d tex date granting a qui tam plaintiff ’s request to keep her identity under seal until the case was resolved because the plaintiff who was formerly employed by a medical device company that was the subject of her qui tam complaint feared that revealing her identity would cause her husband who worked in the same industry to be fired and that he would be unable to obtain new employment despite some similarities qui tam cases and tax whistle- blower cases differ in important ways unlike the false claims act sec_7623 includes no provision for tempo- rarily sealing the record but see sec_7461 authorizing the tax_court to make any provision necessary to prevent the disclosure of confidential information and unlike the false claims act see u s c sec h sec_7623 contains no antiretaliatory provisions see infra discus- sion part iii c c iii whereas the defendant in a qui tam case will generally be an individual or nongovernmental entity the respondent in a tax whistleblower case will always be the commissioner of the irs who is aware of the whistleblower’s identity the subject of a tax whistleblower claim unlike the defendant in a qui tam case is not a party to the case and may not even be aware of the case finally a tax whistleblower case under sec_7623 unlike a qui tam case is an appeal from an administrative_proceeding in which the whistleblower’s confidentiality typically will have been maintained neither sec_7623 nor this court’s rules contain any express provision for notice or inter- vention with respect to the subject of a whistleblower claim in a tax_court proceeding to review a whistleblower award_determination cf sec_6015 providing that if an individual peti- tions the tax_court to determine relief from joint_and_several_liability on a joint_return the nonrequesting spouse is to receive adequate notice and an opportunity to become a party to the proceeding rule regarding notice and intervention by the nonpetitioning spouse in an ac- tion to determine relief from joint_and_several_liability on a joint_return verdate 0ct jun jkt po frm fmt sfmt v files whistle sheila united_states tax_court reports iii confidential informants some courts have permitted confidential informants liti- gating in that capacity to proceed anonymously in par- ticular when a tax whistleblower brings an action under the tucker act the court of federal claims sometimes allows the claimant to proceed anonymously as a confidential informant see 46_fedclaims_1 45_fedclaims_556 similarly with little discussion a district_court recently affirmed a magistrate judge’s determination that a confidential informant should be allowed to proceed anonymously in an action stemming from a city’s disclosing the confidential informant’s identity to a newspaper dkt v city of kokomo 10-cv-00066-twp-mjd s d ind date although not determinative of petitioner’s request to liti- gate anonymously these cases are indicative of our legal sys- tem’s general solicitude for confidential informants for instance various provisions of the internal_revenue_code generally prohibit the irs from disclosing the identities of confidential informants see eg sec_6103 h i in addition in court proceedings the so-called informer privilege generally permits the government to withhold from disclosure the identity of persons who furnish informa- tion of violations of law to officers charged with enforcement of that law 353_us_53 the privilege recognizes the obligation of citizens to commu- nicate their knowledge of the commission of crimes to law- enforcement officials and by preserving their anonymity encourages them to perform that obligation id as one court has explained the informer privilege the court of federal claims originally filed these decisions under seal and later made the decisions public after making redactions requested by the parties see 46_fedclaims_1 45_fedclaims_556 see also 43_fedclaims_529 employing a similar procedure there is also pending in the court of federal claims another such case captioned confidential informant v united_states no 11-153c fed cl filed date the informer privilege is not absolute but is to be balanced against fundamental require- ments of fairness and disclosure in the litigation process 353_us_53 although roviaro was a criminal case in civil cases the doctrine_of informer privi- lege may apply when it appears that the informant will be the target of retaliatory actions by the person who is the subject of the information see eg 565_f2d_19 2d cir indeed there is ample authority for the proposition that the strength of the privilege is greater in civil litigation than in criminal verdate 0ct jun jkt po frm fmt sfmt v files whistle sheila whistleblower 14106-10w v commissioner is an ancient doctrine with its roots in the english common_law founded upon the proposition that an informer may well suffer adverse effects from the disclosure of his identity illustrations of how physical harm may befall one who informs can be found in the reported cases however the likeli- hood of physical reprisal is not a prerequisite to the invocation of the privi- lege often retaliation may be expected to take more subtle forms such as economic duress blacklisting or social ostracism the possibility that reprisals of some sort may occur constitutes nonetheless a strong deterrent to the wholehearted cooperation of the citizenry which is a requisite of effective law enforcement courts have long recognized therefore that to insure cooperation the fear of reprisal must be removed and that ‘the most effective protection from retaliation is the anonymity of the informer ’ 565_f2d_19 2d cir citations omitted quoting 326_f2d_561 5th cir although no privilege similar to the informer privilege shields the identities of informants who speak to private plaintiffs or their counsel as opposed to government counsel courts employ a balancing test to protect confiden- tial informants in such circumstances see wohl confiden- tial informants in private litigation balancing interests in anonymity and disclosure fordham j corp fin l for instance in a case brought by pri- vate individuals against a company under the racketeer influenced and corrupt organizations act u s c secs the district_court denied a defendant’s motion to compel production of documents that would reveal the identities of the plaintiff ’s confidential sources within the company mgmt info techs inc v alyeska pipeline serv co 151_frd_478 d d c writing for the court judge sporkin described the risks of retaliation that whistle- blowers face the case law academic studies and newspaper accounts well document the kind of treatment that is usually visited upon public and private employees who speak out as a matter of conscience on issues of public con- cern for example a six-year study on whistleblowers by myron peretz glazer and penina migdal glazer details the full spectrum of management retaliation against ethical resistors who speak out against company or government policy and the long-term adverse consequences such employees can face see myron peretz glazer and penina migdal glazer the whistleblowers exposing corruption in government and industry study of sixty-four whistleblowers showed significant percentage id verdate 0ct jun jkt po frm fmt sfmt v files whistle sheila united_states tax_court reports remain out of work or underemployed bitter about their punishment and uncertain of ever being able to restore their lives fully see also hatha- way v merit systems protection bd 981_f2d_1237 fed cir upholding determination by merit systems protection board that employee was threatened with removal and unsatisfactory performance because disclosure of questionable employment practices united_states merit systems protection board office of systems review and studies whistleblowing and the federal employee blowing the whistle on fraud waste and mismanagement-who does it and what happen sec_3 date noting that while retaliation is not universal a significant percent- age of federal employees who reported waste or abuse felt they were adversely affected by speaking out matthew l wald whistleblower at nuclear laboratory was disciplined labor dept rules n y times date at a12 describing episode where after speaking out on television employee of government contractor was first isolated from other workers and supervisors and then transferred to a room containing radioactive waste the motive for retaliation by employers is obvious to their detractors whistleblowers are viewed as ‘snitchs’ ‘stool pigeons’ or ‘industrial spys’ sic who are willing to publicly embarrass their co- workers and their companies in order to satisfy their political ethical moral or personal agendas such employees not only wish to hurt their companies their detractors argue but also wish to keep their jobs id pincite quoting westman whistleblowing the law of retalia- tory discharge vii instance according to one report as of there were federal statutes with explicit provisions to protect public and private employees who report violations of law wohl supra pincite for contains an antiretaliatory provision see u s c sec h more- over almost all the states have enacted statutes protecting employees in the public and or private sectors who report illegal conduct wohl supra pincite in stark contrast sec_7623 contains no antiretaliatory provisions the false claims act it is the irs’ stated policy to treat tax whistleblowers as confidential informants the internal_revenue_manual irm states to the extent that the irs whistleblower office determines that an individual is a ‘whistleblower’ under sec_7623 such individual shall be deemed to be a con- fidential informant whose identity shall be protected in accordance with sec_6103 administration irm cch pt at big_number date the regulations under sec_7623 state no unauthorized per- son will be advised of the identity of an informant sec_301_7623-1 proced admin regs in published guidance verdate 0ct jun jkt po frm fmt sfmt v files whistle sheila whistleblower 14106-10w v commissioner to the public on how to file tax whistleblower claims the irs states that it will protect the identity of the claimant to the fullest extent permitted by law notice_2008_4 sec_3 2008_1_cb_253 analysis of petitioner’s request for anonymity in deciding whether petitioner should be allowed to pro- ceed anonymously we take into account not only petitioner’s legitimate privacy interests as a confidential informant but also the nature and severity of the specific harm asserted to arise from disclosing petitioner’s identity and we balance that potential harm against the relevant social interests see eg sealed plaintiff v sealed defendant f 3d pincite- does i thru xxiii v advanced textile corp f 3d pincite wolfchild v united_states fed cl pincite a severity of harm petitioner asserts that professional stigma retaliation and economic duress will result if petitioner’s identity is dis- closed as suggested by the preceding discussion fears of such harm befalling a confidential informant are reasonable although necessarily difficult of proof as a tax whistle- blower petitioner is especially vulnerable to such harm we believe considering the absence of antiretaliatory provisions in sec_7623 petitioner’s counsel represents and respondent does not dispute that petitioner is of an age and station in life that necessitate continued employment the record reasonably supports the conclusion that disclosing petitioner’s identity could adversely affect not merely petitioner’s current employ- ment but also petitioner’s future employability in particular the record strongly suggests that petitioner acquired the information in question not by chance but rather in the normal course of employment for x and that petitioner 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 cause severe damage to peti- this notice also states that in some circumstances such as when the claimant is needed as a witness in a judicial proceeding it may be necessary to reveal the claimant’s identity but that the irs will make every effort to inform the claimant before proceeding in such a case notice_2008_4 sec_3 2008_1_cb_253 verdate 0ct jun jkt po frm fmt sfmt v files whistle sheila united_states tax_court reports tioner’s standing in the professional community that provides petitioner’s customary source of livelihood and could well jeopardize petitioner’s employment moreover the fact that petitioner is no longer employed by x does not immunize petitioner from the possibility of retaliation if petitioner seeks other employment in the future any prospective employer could require petitioner to provide names of previous employers including x which could jeopardize petitioner’s chances by branding petitioner a former whistleblower finally petitioner may someday find it desirable or necessary to seek reemployment with x only to face retaliation as a whistleblower see 459_f2d_303 5th cir finding for similar reasons that an informer’s privilege was available to the government with respect to the defendant’s former employees in a case brought under the flsa enjoin disciplinary proceedings unsuccessful in sum petitioner has demonstrated a risk of harm that far exceeds in severity mere embarrassment or annoyance the retaliation professional ostracism and economic duress which petitioner reasonably fears are we believe no less severe than the harm posed to attorneys and doctors suing to job applicants suing to protect their reputation public aid recipi- ents or native americans joining in a lawsuit pitting their personal interests against those of their communities-all cases in which plaintiffs have been allowed to proceed anony- mously see cases discussed supra part iii c c i and ii but whether petitioner’s harm is sufficiently severe to justify granting petitioner’s request for anonymity depends upon additional considerations including the social interests at stake it is possible that other judicial remedies such as claims for tortious interference with con- tract of business relations and defamation might be available to petitioner if x were to attempt to poison the well for petitioner see 492_fsupp2d_561 e d va commenting on possible remedies potentially available to a qui tam plaintiff for whom the antiretaliatory provisions of the false claims act were inap- plicable but even these types of possible remedies would be unavailing where a prospective employer learned of petitioner’s whistleblowing from a source other than x eg from this court’s public records verdate 0ct jun jkt po frm fmt sfmt v files whistle sheila whistleblower 14106-10w v commissioner b social interests the social interests at stake are mixed on the one hand for reasons previously discussed there is strong social interest in protecting petitioner’s identity as a confidential informant on the other hand the people generally have a right to know who is using their courts 112_f3d_869 7th cir because we have held that respondent is entitled to summary_judgment on a threshold legal issue which does not depend to any appreciable extent on petitioner’s identity we believe that the public’s interest in knowing petitioner’s identity is relatively weak see eg sealed plaintiff v sealed defendant f 3d pincite does i thru xxiii v advanced textile corp f 3d pincite3 lozano v city of hazleton f_supp 2d pincite doe v del rio f_r d pincite w here a lawsuit seeks to raise an abstract question of law that affects many similarly situated individuals the identities of the particular parties bringing the suit may be largely irrelevant to the public concern with the nature of the process 52_fsupp2d_1027 n d iowa c other considerations the parties agree that petitioner’s identity as a whistle- blower has been kept confidential so far there is no sugges- tion that petitioner has illegitimate motives in requesting anonymity and because respondent already knows peti- tioner’s identity he will not be prejudiced if petitioner pro- ceeds anonymously he does not assert otherwise moreover granting petitioner’s request for anonymity accords with the whistleblower office’s general administra- tive practice as applied to petitioner of keeping whistle- blowers’ identities confidential see wolfchild v united_states fed cl pincite citing such a consideration as a favorable factor in permitting plaintiffs to proceed anony- mously respondent suggests that by pursuing judicial review petitioner has chosen to relinquish the confidentiality accorded by the whistleblower office respondent’s take-it- it is unnecessary for us to decide and we do not decide to what extent the balancing test might become more onerous for a whistleblower seeking anonymity in a case in which the whis- tleblower’s identity were of greater public interest verdate 0ct jun jkt po frm fmt sfmt v files whistle sheila united_states tax_court reports or-leave-it approach to confidentiality improperly minimizes the practical value of judicial review which is an integral part of the scheme under sec_7623 respondent’s approach which we cannot say is disinterested would con- front claimants with a dilemma of either forfeiting confiden- tiality to seek judicial review or forfeiting judicial review the likely upshot would be a chilling effect on some claim- ants who have a compelling need to proceed anonymously this result would be at odds with the ostensible legislative purpose of encouraging tax whistleblower claims and pro- moting public confidence through judicial oversight in the administration of the tax whistleblower award program conclusion granting petitioner anonymity we conclude that granting petitioner’s request for ano- nymity strikes a reasonable balance between petitioner’s pri- vacy interests as a confidential informant 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 sec_7461 and rule a we shall permit petitioner to proceed effectively anonymously as a whistleblower in furtherance of this decision we shall order the parties to redact from the existing record and from any future submissions any information that would tend to reveal peti- tioner’s identity furthermore because of concerns that revealing x’s identity could enable petitioner’s identity to be deduced we shall also order the parties to redact from the record x’s name and any identifying information regarding x d denying petitioner’s motion to seal the record we believe that permitting petitioner to proceed anony- mously and requiring redaction of identifying information we do not mean to suggest that this balancing test would or should necessarily result in anonymity for all tax whistleblowers in this court ultimately absent any legislative directive to the contrary each request to proceed anonymously must stand upon its own such redactions should encompass those mandated by rule as well as any additional redactions necessary and appropriate to protect the identity of petitioner and conceal the iden- tity of x we do not consider in this case the extent if any to which the identity of the subject of a whistleblower claim should be protected in a case in which disclosing the subject’s identity would not tend to jeopardize the whistleblower’s legitimate privacy interests verdate 0ct jun jkt po frm fmt sfmt v files whistle sheila whistleblower 14106-10w v commissioner 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 follow the legal proceedings in this case consequently we shall deny petitioner’s motion to seal the record to reflect the foregoing an appropriate order will be issued and for order and decision will be entered respondent reviewed by the court colvin cohen vasquez goeke wherry kroupa gustafson paris and morrison jj agree with this majority opinion halpern j concurring snitches get stitches no doubt we can infer congress’ awareness of that old piece of advice when it provided a public forum the tax_court in which a whistleblower might seek review of her claim that the commissioner erred in not paying her for fingering a tax cheat or detecting someone’s underpayment_of_tax while the majority has done an admirable job in assembling the law regarding confidentiality i do not believe that it has ade- quately considered whether in the face of congress’ choice of a public forum for such actions we should craft what amounts to a rule_of law shielding whistleblowers still in the workforce from identification the evidence the majority relies on to support its conclu- sion that identifying petitioner could adversely affect her employment prospects is petitioner’s affidavit that her present employer and any prospective employer would not want to employ someone known to be a snitch majority op pp that conclusion seems correct but not because petitioner has proven that she particularly among whistleblowers remaining in the workforce would face employment discrimination were we to reveal her identity we shall not lift the temporary seal however until after the parties have been provided an opportunity to redact the record pursuant to the court’s order i use feminine personal pronouns as a convenience with no intent to identify petitioner’s gen- der verdate 0ct jun jkt po frm fmt sfmt v files whistle sheila united_states tax_court reports but because her claim rings true as a matter of common sense for all whistleblowers remaining in the workforce whose identity is revealed while the majority suggests that the public’s interest in knowing a whistleblower’s identity might be stronger in a case unlike this one that is not dis- posed 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 majority’s opinion be granted at least in the early stages of a case without contradicting this case what additional evidence might we demand of the next whistle- blower coming before us expressing a genuine fear of employment discrimination and asking for at least tem- porary anonymity in administrative and the privacy protections afforded by statute to those partici- pating in or affected by whistleblower actions may be inad- equate for instance the national_taxpayer_advocate rec- ommended to congress in that it amend the internal_revenue_code to require redaction of third-party return_information judicial proceedings relating to whistleblower claims national taxpayer advo- cate annual report to congress legis- lative recommendation protect taxpayer privacy in whistle- blower cases one could argue that congress intended whistleblowers to bear the privacy risks inherent in asking for review of their whistleblower claims in a public forum the tax_court but if congress did not intend that and because we are writing a rule rather than disposing of a single 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 sec_7623 action fair notice that we will not automatically grant anonymity upon a claim of possible employment discrimination were 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 sec_7623 action against the expected cost measured in dol- lars of the disadvantages associated with the public disclo- that is because the risk of identification as a whistleblower and thus the risk of employ- ment discrimination exists from the beginning of a case since as an administrative matter to identify whistleblower cases we add to the docket number of each such case the letter w verdate 0ct jun jkt po frm fmt sfmt v files whistle sheila whistleblower 14106-10w v commissioner sure of information that ordinarily becomes part of the case file and the public record in a tax_court case some whistle- blowers may find that the expected costs outweigh the expected benefits until and unless congress acts i believe that is the best we can offer wherry and holmes jj agree with this concurring opinion f i do not however rule out anonymity upon a sufficient fact-specific showing see eg anon- ymous v commissioner 127_tc_89 verdate 0ct jun jkt po frm fmt sfmt v files whistle sheila


internal_revenue_service memorandum cc dom it a crfrance tl-n-7959-97wli3 sca uilc date to from date district_counsel houston attn christina moss assistant chief_counsel income_tax accounting disclaimer returns subject significant service_center advice this responds to your request for significant service_center advice dated date in connection with a question posed by the austin service_center disclosure statement unless specifically marked acknowledged significant advice may be disseminated above this memorandum is not to be circulated or disseminated except as provided in ccdm d and e this document may contain confidential information subject_to the attorney-client and deliberative_process privileges therefore this document shall not be disclosed beyond the office or individual s who originated the question discussed herein and are working the matter with the requisite need to know in no event shall it be disclosed to taxpayers or their representatives issue whether a complete form_1040 with an attachment to an otherwise effective penalties of perjury statement hereafter addition is a valid_return for federal tax purposes conclusion a complete form_1040 with an addition that denies tax_liability is not a valid_return because the addition negates the penalties of perjury statement however if the addition doe sec_1 the use of the phrase otherwise effective penalties of perjury statement means the taxpayer signed the statement and did not make a change to it not negate the statement but merely makes a protest against taxes or other matters the form is a valid_return for federal tax purposes facts a service_center receives complete form sec_1040 with additions in which taxpayers protest the payment of taxes taxpayers usually call attention to the addition by writing an asterisk on the return either next to line total_tax amount or line the tax amount owed and inserting on the second page of the return by lines or on the bottom of the second page the following text the admitted liability is zero see attached disclaimer statement in the examples you provided all the additions state that the taxpayer denies liability for the tax shown on the form_1040 in some cases the taxpayer also includes dollar_figure with the form_1040 and states in the addition the following payment in the amount of dollar_figure as a voluntary contribution the service_center has experienced some uncertainty in its disposition of these sorts of forms because of this and the potential for inconsistent treatment and processing of these forms you requested this significant service_center advice discussion sec_6001 of the internal_revenue_code requires every person liable for tax to make a return and comply with the rules and regulations issued by the internal_revenue_service sec_6011 of the code requires every person liable for tax imposed by title_26 to make a return according to the forms and regulations prescribed by the service sec_6065 of the code and sec_1_6065-1 of the income_tax regulations require any return made under any provision of the internal revenue laws or regulations to contain or be verified by a written declaration that it is made under penalties of perjury if a taxpayer fails to comply with sec_6065 by submitting a return without the executed penalties of perjury statement that return is a nullity 281_us_245 for example in 845_f2d_794 8th cir the court found that the taxpayer's return was a nullity because striking the words under penalties of perjury negated the penalties of perjury statement a taxpayer can also negate the penalties of perjury statement with an addition in 140_br_571 bank w d okl the taxpayers filed a return with the following statement at the end of the penalties of perjury statement signed under duress see statement attached in the addition the taxpayers denied liability for tax on wages the service argued that the statement added to the return qualified the penalties of perjury statement thus making the penalties of perjury statement ineffective and the return a nullity id pincite in agreeing with the service the court pointed out that the voluntary nature of our tax system requires the service to rely on a taxpayer’s self-assessment and on a taxpayer’s assurance that the figures supplied are true to the best of his or her knowledge id accordingly the penalties of perjury statement has important significance in our tax system the statement connects the taxpayer’s attestation of tax_liability by the signing of the statement with the service’s statutory ability to summarily assess the tax similarly in 53_f3d_799 7th cir cert_denied 516_us_897 the taxpayers submitted a return containing the words denial disclaimer attached as part of this form above their signatures in the addition the taxpayers denied liability for any individual income_tax in determining the effect of the addition on the penalties of perjury statement the court reasoned that it is a close question whether the addition negates the penalties of perjury statement or not the addition according to the court could be read just to mean that the taxpayers reserve their right to renew their constitutional challenge to the federal_income_tax law however the court concluded that the addition negated the penalties of perjury statement id pincite in both schmitt and sloan the court questioned the purpose of the addition both courts found that the addition of qualifying language was intended to deny tax_liability accordingly this effect rendered the purported returns invalid on the other hand courts have acknowledged that taxpayers may make additions to the return to exercise their first amendment rights without negating the penalties of perjury statement for example in mccormick v comm’r u s t c big_number e d n y the taxpayer timely filed a complete return and signed it under penalties of perjury immediately below the penalties of perjury statement the taxpayer added the statement under protest the service did not treat the return as a valid_return the court found in favor of the taxpayer finding that the taxpayer was lodging a protest rather than denying tax_liability see also 849_f2d_365 9th cir these cases highlight the tension between a taxpayer's exercise of first amendment constitutional rights and a taxpayer's statutory obligation to file a tax_return under penalties of perjury if by making the addition the taxpayer both exercises a constitutionally protected right to protest and negates the penalties of perjury statement courts have held that the statutory duty to file a tax_return outweighs the small infringement if any on a taxpayer's first amendment right to protest see sloan f 3d pincite hettig f 2d pincite you submitted several redacted form sec_1040 with additions for our consideration to determine whether an addition to a form_1040 denies tax_liability the courts analyze the purpose of the addition in each of the form sec_1040 you submitted for our review the addition explicitly denies the tax_liability set forth on the related return these additions therefore negate the penalties of perjury statements and the form sec_1040 fail to constitute valid returns for federal tax purposes when the service_center receives a form_1040 with an addition we suggest the service_center process the form as follows upon receipt of the form the code and editing function note however that in 32_tc_653 aff’d 277_f2d_16 3d cir the taxpayer filed an otherwise facially complete return showing a tax due the taxpayer attached a letter to the return denying that it owed the tax claiming the applicable taxing statute as unconstitutional the court concluded that the taxpayer had filed a valid_return thus the court appeared to cast the return as a no tax_return meaning the reported tax_liability is actually zero rather than as a nullity see id pincite murdock j concurring at the service_center should promptly send the form to the examination function if the examination function determines that a taxpayer’s addition denies tax_liability and therefore negates an otherwise effective penalties of perjury statement the form is not a valid_return and penalties such as the failure_to_file_penalty and interest would apply the examination function should contact district_counsel regarding the disposition of forms containing ambiguous or doubtful additions moreover if the return is not a valid_return the service should issue a statutory_notice_of_deficiency for any taxes due including any amount determined by the taxpayer this practice will protect the statute_of_limitations on assessment if a court subsequently decides that the form is a valid_return we trust this advice addresses your concerns satisfactorily if you have any questions please contact ms renay france an attorney of my staff on by s rochelle l hodes senior technician reviewer branch cc assistant regional_counsel tl midstates region assistant regional_counsel ct midstates region