                           148 T.C. No. 25



                  UNITED STATES TAX COURT



        WHISTLEBLOWER 14377-16W, Petitioner v.
    COMMISSIONER OF INTERNAL REVENUE, Respondent



Docket No. 14377-16W.                         Filed June 28, 2017.



       P has moved to proceed anonymously in this whistleblower
action involving his claim that a corporate taxpayer evaded paying
nearly $100 million in taxes (motion). P, a self-described "analyst of
financial institutions", learned of the corporate taxpayer's claimed tax
abuse from publicly available sources, such as Securities and
Exchange Commission Forms 10-K. P has pending before the Court
a total of 11 cases, involving 21 numbered whistleblower claims and
as many as 50 separate taxpayers. P also has four cases pending
before the IRS, involving six taxpayers. P has moved to proceed
anonymously because he fears that, if his identity as a tax
whistleblower is disclosed, he will suffer both economic and personal
harm.

       Held: While we are mindful of our legal system's general
solicitude for confidential informants, P has not made a sufficient
fact-specific case for anonymity. See Rule 345(a), Tax Court Rules
of Practice and Procedure. On balance, P's interest in protecting his
                                        -2-

      anonymity is outweighed by the public's interest in identifying serial
      claimants of whistleblower awards filing petitions in the Tax Court.

             Held, further, we will deny the motion.



      [Sealed].

      Jonathan D. Tepper, for respondent.



                                     OPINION


      HALPERN, Judge: Petitioner brought this action pursuant to section

7623(b) for us to review respondent's denial of his claim for a so-called

whistleblower award.1 Concurrently with filing the petition, petitioner moved

pursuant to Rule 345(a) to proceed anonymously (motion), and we temporarily

sealed the record in the case pending resolution by the Court of the motion.




      1
        All section references are to the Internal Revenue Code of 1986, as
amended, and all Rule references are to the Tax Court Rules of Practice and
Procedure. We use male-gender personal pronouns to refer to petitioner and to the
anonymous whistleblowers in the cases we cite for convenience and without
intention to identify their actual genders.
                                         -3-

Respondent objects to our granting the motion. For the reasons stated, we will

deny the motion.2

                                     Background

      Petitioner assigned error to respondent's determination to deny him a

whistleblower award. He avers, among other things, that the corporate taxpayer

with respect to which he is claiming a whistleblower award (taxpayer) understated

its income by numerous improper actions, including "failing to report millions of

dollars in income received from the sale of gift cards". In all, petitioner claims,

taxpayer "evaded paying nearly $100 million in taxes." In a declaration in support

of the motion, he states that he discovered the materials and facts relevant to his

whistleblower claim in his capacity as an "analyst of financial institutions." He

prays for anonymity because "he legitimately fears that if his identity as a tax




      2
        Nevertheless, we have changed the caption of the case to accord petitioner
anonymity in case he wishes to appeal our denial of the motion. At least four
United States Courts of Appeal have held that orders denying leave to proceed
under a pseudonym are immediately appealable as collateral orders. See Raiser v.
Brigham Young University, 127 F. App'x 409, 410 (10th Cir. 2005); Does I Thru
XXIII v. Advanced Textile Corp., 214 F.3d 1058, 1066 (9th Cir. 2000); James v.
Jacobson, 6 F.3d 233, 237 (4th Cir. 1993); S. Methodist Univ. Ass'n of Women
Law Students v. Wynne & Jaffe, 599 F.2d 707, 712 (5th Cir. 1979). If within 30
days of our issuing our order denying the motion petitioner does not file with the
Clerk of the Court a notice of appeal, we will change the caption back to reflect
the petition as filed.
                                        -4-

whistleblower is disclosed, he will be blacklisted from his profession, and he and

his family will suffer severe financial harm."

      Following receipt of the motion, we conferred with the parties by telephone

to solicit respondent's position on granting the motion and to inform petitioner that

we were aware of 8 (now 10) other cases before the Court in which he is appealing

the Commissioner's determination to deny him a whistleblower award. The 11

cases involve in excess of two dozen taxpayers, and all appear to have resulted not

from petitioner's employment by, or other close relationship to, the target taxpayer

but from his examination of publicly available materials, such as Securities and

Exchange Commission (SEC) Forms 10-K. We informed petitioner that the public

has an interest in knowing the identity of persons using the courts, and that, in

deciding motions to proceed anonymously, the Court must resolve the competing

societal interests at stake. See, e.g., Whistleblower 14106-10W v. Commissioner,

137 T.C. 183, 205 (2011) (balancing societal interests of (1) protecting identity of

confidential informant with (2) people's right to know who is using courts).

Following our teleconference, we ordered respondent to respond in writing to the

motion, setting forth the particulars of his objection, and we ordered petitioner to

reply, addressing not only respondent's grounds but also why petitioner's use of

the Tax Court to pursue his numerous whistleblower claims is not a matter of
                                         -5-

public interest that should weigh against keeping his identity anonymous. We also

ordered petitioner to inform us of how many whistleblower claims that are not the

subject of petitions to the Tax Court he has pending before the Internal Revenue

Service (IRS). The parties complied with our order.

Respondent's Grounds for Objecting

      Respondent's principal objection is that petitioner has failed to set forth a

sufficient, fact-specific basis for protecting his confidentiality that would override

the public's strong, legitimate interest in having access to the record in this case.

Respondent adds that petitioner has no need for anonymity because he obtains the

information upon which he bases his whistleblower claims from publicly available

sources accessible on the internet and not from confidential, or insider, sources.

Respondent lists seven failures by petitioner to comply with the requirement of

Rule 345(a) to provide a sufficient, fact-specific basis for anonymity. Those are

petitioner's failures to (1) identify his current employment and how disclosure

would affect that employment, (2) identify the specific circumstances of his

discovery of the materials and facts submitted to respondent in support of his

whistleblower claim, (3) disclose that his information is based on publicly

available documents, such as "SEC 10-K filings", (4) identify his relationship, if

any, to taxpayer, (5) provide information concerning present or prospective
                                         -6-

clients, (6) identify his professional credentials and how those credentials would

be affected by a denial of anonymity, and (7) support his allegation that, if his

identity were known, he would be blacklisted.

      With respect to the balancing of societal interests, respondent states:

      It is in the public's best interest to understand the circumstances
      surrounding these filings, including the frequency of filings by a
      single petitioner that may be based not upon insider information, but
      upon publically available information. This type of information is
      valuable to the public in understanding how individuals are using the
      Court system, including evaluating whistleblower proceedings before
      the U.S. Tax Court.

Petitioner's Reply

      Petitioner claims that he is a retired certified public accountant (C.P.A.) and

his primary occupation is assisting his spouse in managing and operating a

registered investment advisory business. He further claims: "Disclosure would

have a negative impact on my domestic relationship with my spouse, posing a

threat to our domestic circumstances, and would impair my ability to assist with

* * * [the business] and earn income from the management of the practice." He

fears that disclosure of his identity might "alienat[e]" business partners who might

have relationships with taxpayers he identifies. He also fears retribution from

political figures close to those taxpayers.
                                         -7-

      Petitioner answers respondent's claim that he failed to identify the

circumstances of his discovery of materials leading to his whistleblower claims by

identifying financial statements, Forms 10-K, and other available data as the

source of his identification of publicly held restaurant companies that may have

violated tax rules relating to the recognition of "gift card" income. He concedes:

"[My] analysis emanated from public information". He adds: "The most

important source of information utilized by Petitioner includes the extensive data,

often encompassing thousands upon thousands of pages which * * * [taxpayers

identified by petitioner] would have filed with the SEC."

      He concedes that he has no relationship to any taxpayer that he has

identified to the IRS, "other than as an investment analyst and claimant."

      He does not identify present or prospective clients, stating: "[I]nformation

relating to Petitioner's current or prospective clients is highly confidential". He

does add that the investment advisory business relies "on relationship[s] with

normal everyday private citizens and small businesses."

      He states that he no longer holds a license as a C.P.A. and his only

certification is a "Series 65 Certification" as a registered investment adviser.

      In response to respondent's claim that petitioner has failed to provide

support for his claim that revealing his whistleblower activities will cause him to
                                         -8-

be blacklisted, petitioner points to no specific risk but makes only generalized

claims, for example:

             Petitioner does not believe that there is justification for singling
      Petitioner out, given the history and practice as to these matters and
      that doing so would lend a chilling effect to any future Whistle-
      blowers relying on industry expertise, specialized knowledge and
      analysis of public information or data, in filing Whistleblower claims
      consistent with governmental policy objectives. Petitioner believes
      that this would cut sharply against the very purpose and intent of the
      Tax Whistleblower laws by curtailing public participation in support
      of those laws.

      In response to our order that petitioner inform us of how many

whistleblower claims he has pending before the IRS that are not the subject of

petitions to the Tax Court, he answers that he "has four 'submissions' and

associated claims pending before the Internal Revenue Service." He adds that one

submission involves three claims associated with one taxpayer, two submissions

involve one claim each associated with two taxpayers, and the fourth involves one

taxpayer. Also, he believes that there are 51 claim numbers issued in connection

with submissions that were supplemental to his cases before the Court.

                                     Discussion

      Rule 345 concerns itself with privacy protections for filings in whistle-

blower actions. Paragraph (a) of the Rule allows petitioners in whistleblower

actions to move the Court for permission to proceed anonymously. The movant
                                        -9-

must set forth a sufficient, fact-specific basis for anonymity. Id. We will permit a

whistleblower to proceed anonymously if the whistleblower presents a sufficient

showing of potential harm that outweighs counterbalancing societal interests in

knowing the whistleblower's identity. Whistleblower 12568-16W v.

Commissioner, 148 T.C. __, __ (slip op. at 5) (Mar. 22, 2017).

      In only five reports have we addressed a whistleblower's motion to proceed

anonymously. In Whistleblower 14106-10W v. Commissioner, 137 T.C. 183, we

considered the claim of a whistleblower who feared that professional stigma,

retaliation, and economic distress would result from the disclosure of his identity.

He had provided information to the IRS concerning a former employer's alleged

tax underpayments. Id. at 184-185. Assuming that he had acquired that

information not by chance but in the normal course of employment and that he was

privy to internal deliberations and communications regarding the events that

allegedly gave rise to the underpayment, we found that revealing his status as a tax

whistleblower in these circumstances would not only invade the whistleblower's

legitimate privacy interest as a confidential informant but also would likely cause

severe damage to his standing in the professional community that provided his

customary source of livelihood and could well jeopardize his employment. Id. at

203-204. In calculating the societal interest of the people's right to know who is
                                        - 10 -

using their courts, we took into account that we were disposing of the case on

respondent's motion for summary judgment on a threshold legal issue that did not

depend to any appreciable extent on the whistleblower's identity. Id. at 205. We

concluded that the public's interest in knowing his identity was relatively weak,

id., and, for that and other reasons, we determined to grant his motion

to proceed anonymously.

      In Whistleblower 10949-13W v. Commissioner, T.C. Memo. 2014-94, at

*3, we accepted as true that U.S. Department of Justice attorneys had informed the

whistleblower that the taxpayers he had identified were connected with organized

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

their activities. Also, we accepted as true that he had received a death threat from

one of the taxpayers through its counsel. Id. We found that the harm that could

befall him outweighed the societal interest in knowing his name. Id. at *6. We

determined to grant his motion to proceed anonymously. Id.

      In Whistleblower 11332-13W v. Commissioner, T.C. Memo. 2014-92, at

*1-*3, we accepted as true that, when the whistleblower had raised to the target

taxpayer concerns over its tax structure, the target had used physical force and

armed men to intimidate him and to prevent disclosure. We also accepted as true

that he had received a death threat through the target's counsel and that the
                                         - 11 -

Government had offered to place him in the witness protection program. Id. at *4.

Finding a risk of extreme physical harm to him and his family, we determined to

grant his motion to proceed anonymously. Id. at *12.

      In Whistleblower 13412-12W v. Commissioner, T.C. Memo. 2014-93, at

*5-*6, the whistleblower, an ex-employee of the target taxpayer, alleged no

physical threat but alleged the risk of financial retaliation (loss of pension

benefits), social and professional stigma, and economic duress. Although we

voiced our reservations about the likelihood of the prospect of financial

retaliation, we found that the nature of the potential harm to him outweighed the

societal interest in knowing his identity. We determined to grant his motion to

proceed anonymously. Id. at *6.

      In Whistleblower 12568-16W v. Commissioner, 148 T.C. __, the

whistleblower claimed to have learned of fraudulent actions by the target taxpayer

during his prior employment by an entity related to the target taxpayer. He alleged

possible retaliation against him and his family, resulting in possible physical harm

to himself, professional and personal ostracism, economic loss, and danger to his

family. Id. at __ (slip op. at 3). We determined to grant his motion to proceed

anonymously, taking into account that, in the early stage of a whistleblower case,

the societal interest in knowing the whistleblower's identity may be relatively
                                       - 12 -

weak. See id. at __ (slip op. at 4-6). We cautioned, however, that, as the case

progressed, the balance that we initially found to weigh in favor of anonymity

might change, with the public's interest in learning the whistleblower's identity

outweighing his continued concern for anonymity. Id. at __ (slip op. at 9).

      Unlike the claimants in three of the reports summarized above,

Whistleblower 10949-13W, Whistleblower 11332-13W, and Whistleblower

12568-16W, petitioner makes no plausible claim that he was (or may be)

threatened physically. Nor does he claim an employee relationship during which

he was privy to internal deliberations and communications regarding the possible

underpayment of tax, the revelation of which circumstances we said in

Whistleblower 14106-10W v. Commissioner, 137 T.C. at 200-203, would likely

severely damage a whistleblower's professional standing in the community in

which he customarily earns his living and could well jeopardize his employment.

And petitioner is at no risk of the loss of employment-related benefits, such as

retirement benefits. See Whistleblower 13412-12W v. Commissioner, T.C.

Memo. 2014-92.

      Unlike the claimants in the five reports summarized above, petitioner has

not identified a taxpayer who, upon learning petitioner's identity, would have the

power to, and might be expected to, act against him. And while we acknowledge
                                        - 13 -

our legal system's general solicitude for confidential informants, see

Whistleblower 14106-10W v. Commissioner, 137 T.C. at 200, and we accept that

petitioner may suffer some embarrassment or annoyance from our denying the

motion, his fears of marital discord, the alienation of unnamed business partners,

and retribution from unnamed political figures are speculative, and, thus,

petitioner has not provided us with a sufficient "fact-specific" justification for

permission to proceed anonymously. See Rule 345(a). Nevertheless, given the

early stage of this case, we might otherwise be inclined to weigh the people's

interest in knowing who is using the courts as so weak as to give petitioner the

benefit of the doubt, at least temporarily. See Whistleblower 12568-16W v.

Commissioner, 148 T.C. at __ (slip op. at 5-7). But petitioner is an unusual

claimant to our whistleblower jurisdiction. He has so far brought 11

whistleblower cases in the Tax Court. He has in his supporting papers identified

21 numbered whistleblower claims (whistleblower claims with a separate

processing number assigned by the IRS), and he has in those papers identified by

name 26 taxpayers and included by reference (without naming them) 24 more. He

also has pending before respondent four "submissions" (involving, it appears, six
                                        - 14 -

numbered whistleblower claims and six taxpayers).3 He also admits that he has

before respondent 51 numbered claims supplemental to claims in cases already

before the Court. Each of those as-yet-unresolved supplemental claims is

potentially the source of another adverse determination and a resulting petition to

the Court.4 Petitioner's recourse to publicly available materials to identify

supposed tax abuses imposes no natural limit other than his own industriousness

on the number of cases he could bring. His lack of an employment or other close

relationship to the taxpayers he identifies suggests that he has no familiarity with a

taxpayer's basis or rationale for taking what petitioner considers an abusive

position. For those reasons, serial claimants of whistleblower awards may

disproportionately burden the Court with petitions only superficially meritorious.

Moreover, the phenomena of potential claimants of whistleblower awards


      3
        There is not necessarily a one-to-one correspondence between numbered
whistleblower claims and the number of taxpayers identified to the IRS by a
whistleblower on a single IRS Form 211, Application for Award for Original
Information. See Internal Revenue Manual pt. 25.2.2.4(2) (Aug. 7, 2015)
(multiple taxpayers identified in a single claim "may" each receive a separate
claim number). And while one adverse whistleblower determination will
generally give rise to no more than one Tax Court petition (i.e., one whistleblower
case), the determination may address more than one numbered claim, each of
which itself may identify more than one taxpayer with respect to whom the
petitioner seeks a whistleblower award.
      4
       See Comparini v. Commissioner, 143 T.C. 274 (2014) (Whistleblower
Office may issue as to a given claim more than one determination).
                                        - 15 -

searching publicly available documents for evidence of tax abuse is not

insignificant. Apparently, a cottage industry has sprung up involving mining

publicly available documents for the chance to claim a bounty from the IRS.5

Unless we identify serial filers by name, the public will be unable to judge

accurately the extent to which the serial filer phenomenon has affected the work of

the Tax Court because the public would not know whether any particular

petitioner of an adverse whistleblower determination had filed petitions appealing

other adverse whistleblower determinations. Finally, addressing motions by all

whistleblowers to proceed anonymously requires special handling by the Court;

for example, the record is sealed temporarily, the normal procedures for electronic

filing and electronic service cannot at this time be used, the case must be assigned

to a judicial officer earlier than normal in order to address the motion, and, in


      5
          The New York Times reported on Sept. 11, 2012:

      Since the law was strengthened in 2006, it has spawned a cottage
      industry of whistle-blower lawyers and private investigators. They
      have generated hundreds of claims alleging tens of billions of dollars
      in tax evasion. In a few cases, hedge funds have actually invested in
      the cases, paying whistle-blowers cash up front in exchange for a
      percentage of any award they ultimately collect.

David Kocieniewski, "Whistle-Blower Awarded $104 Million by I.R.S.", N.Y.
Times, Sept. 11, 2012, http://www.nytimes.com/2012/09/12/business/whistle-
blower-awarded-104-million-by-irs.html.
                                       - 16 -

some cases, trials and hearing may need to be closed to the public to protect the

whistleblower's anonymity. The public may wish to know the extent to which

petitioners with numerous whistleblower claims require such special handling.6

                                    Conclusion

      On the facts before us, mindful of our legal system's general solicitude for

confidential informants, but balancing petitioner's weak "fact-specific"

justification for anonymity against the public's interest in knowing who is using

the Tax Court to bring serial whistleblower claims, we find that the public's

interest in knowing prevails. As stated, we will deny the motion.


                                                An appropriate order will be issued

                                       denying petitioner's motion.




      6
        We note that, although the Commissioner has obligated himself to use his
best efforts to protect the identity of whistleblowers, that obligation is not
absolute, and, in some circumstances, the Commissioner may need to reveal a
whistleblower's identity (for example, if the whistleblower is to be called as a
witness in a judicial proceeding). See sec. 301.7623-1(e), Proced. & Admin. Regs.
The risk to a whistleblower that he will not remain anonymous is present from the
time he submits a whistleblower claim to the IRS.
