                                  T.C. Memo. 2014-94



                           UNITED STATES TAX COURT



                 WHISTLEBLOWER 10949-13W, Petitioner v.
             COMMISSIONER OF INTERNAL REVENUE, Respondent



      Docket No. 10949-13W.                         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 proceed anonymously under Rule 345(a).1 2 The whistleblower has

      1
       The Court is issuing this Memorandum Opinion because there is a lack of
whistleblower caselaw.
      2
          All section references are to the Internal Revenue Code in effect for all
                                                                         (continued...)
                                        -2-

[*2] demonstrated that proceeding anonymously is necessary to protect the

whistleblower’s professional reputation, economic interests and personal safety.

We will grant the motion and order that the record in this case remain sealed until

further order of this Court.

                                    Background

      The following information is stated only for purposes of resolving the

pending motion 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

whistleblower and prevent disclosure. The whistleblower reported the tax scheme

to the Government and for several years assisted the Government in its


      2
        (...continued)
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.
                                         -3-

[*3] investigation of targets. Based partly on the whistleblower’s information, the

Government eventually recovered more than $30 million in taxes, penalties and

interest.

       On August 1, 2011, the whistleblower filed a Form 211, Application for

Award for Original Information, and submitted to the IRS Whistleblower Office

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

whistleblower disclosed since December 20, 2006. 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.

       The whistleblower was aware that the Government investigated targets for

potential ties to terrorist groups. Additionally, Department of Justice attorneys

informed the whistleblower that targets were connected to organized crime and

terrorism and could resort to physical force or harm in connection with their

activities. The whistleblower received a death threat from one of the targets

through its counsel. On one occasion the whistleblower used armed guards for

safety when the whistleblower traveled abroad. Additionally, targets have lodged

numerous litigation threats against the whistleblower relating to the whistleblower

claims.
                                         -4-

[*4] The whistleblower asserts that revealing the whistleblower’s identity would

result in the risk of retaliation, social and professional stigma, economic duress

and personal safety. Specifically, the whistleblower asserts that disclosing the

whistleblower’s identity will result in professional stigma and impair the

whistleblower’s livelihood by alienating the whistleblower’s potential clients and

business contacts. Finally, the whistleblower asserts that the whistleblower is of

an age and station in life that necessitates continued employment.

      The whistleblower filed the motion to proceed anonymously at the same

time the whistleblower filed the petition. Respondent filed a notice of no

objection to the motion.

                                     Discussion

      We are asked to decide whether the whistleblower should be permitted 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
                                        -5-

[*5] 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 Thru XXIII v. Advanced Textile Corp., 214 F.3d 1058, 1068 (9th

Cir. 2000). 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. 89, 94 (2006); 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 taxpayer’s family outweighed 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.
                                         -6-

[*6] The whistleblower has satisfied the 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 professional stigma and economic

duress.3 Most importantly, disclosure of the whistleblower’s identity would place

the whistleblower 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, one of targets previously threatened the

whistleblower’s life. Targets’ actions evidence a pattern of intimidation,

aggression and physical threats of harm towards the whistleblower. In short, the

nature and severity of potential harm that could befall the whistleblower outweigh

the societal interest in knowing the whistleblower’s identity.

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

proceed anonymously and the record in this case will remain sealed until further

order of the Court.


                                               An appropriate order will be issued.


      3
        It is also evident that revealing the whistleblower’s identity could adversely
affect the whistleblower’s professional reputation, current employment and future
employment opportunities.
