  WHISTLEBLOWER ONE 10683–13W, WHISTLEBLOWER TWO
   10683–13W, AND WHISTLEBLOWER THREE 10683–13W,
       PETITIONERS v. COMMISSIONER OF INTERNAL
                REVENUE, RESPONDENT
          Docket No. 10683–13W.      Filed September 16, 2015.

        This is a so-called whistleblower case brought pursuant to
      I.R.C. sec. 7623(b)(4). Ps move to compel production of docu-
      ments and responses to interrogatories (motions). R objects on
      the ground that the requested information is outside the
      administrative record compiled by R’s Whistleblower Office
      and is, thus, not discoverable. Held: Even were we to agree
      with R that the Court’s scope of review is the administrative
      record, R cannot unilaterally decide what constitutes that
      record, and R’s response indicates that the purported record
      is incomplete. Held, further, we will issue an appropriate
      order granting the motions.

  Henry Stow Lovejoy, Usman Mohammad, Bryan                            C.
Skarlatos, and Brian C. Wille, for petitioners.
  David K. Barnes and H.R. Roberson, for respondent.
                                OPINION

  HALPERN, Judge: This case is brought pursuant to section
7623(b)(4), 1 appealing respondent’s determination not to
make an award to petitioners for information provided by
them and leading to the recovery of unpaid taxes and other
amounts (a so-called whistleblower award). Petitioners move
to compel production of documents and responses to interrog-
atories (motions). Respondent has filed virtually identical
responses (responses) to each motion, his sole objection being
that the information requested is not contained within his
Whistleblower Office’s case file (a purported ‘‘administrative
record’’) and, therefore, is beyond the scope of discovery. We
disagree and will grant the motions.

                             Background
  Petitioners filed a whistleblower claim with the Internal
Revenue Service (IRS) in 2006, in which they informed the
IRS of a tax evasion scheme (TES) carried out by a specific
  1 All section references are to the Internal Revenue Code of 1986, as

amended and in effect at all relevant times, and all Rule references are
to the Tax Court Rules of Practice and Procedure.

204
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target corporation (target). Petitioners allege that the
information they provided resulted in the IRS (1) inves-
tigating certain transactions of the target and (2) initially
disallowing the TES. The IRS issued a legal memorandum
for general distribution stating that all transactions similar
to the TES should not be respected. Petitioners allege that
the information they provided led to the issuing of that legal
memorandum. With respect to the target, however, they
allege that the IRS later reversed course and respected the
target’s use of the TES. They further allege that the allow-
ance of the TES was part of a larger compromise in which
the target agreed to over $50 million of tax adjustments.
They also allege that they informed the IRS about a sham
debt obligation of the target that was related to the TES. The
target claimed an over $20 million loss deduction related to
the debt obligation, and petitioners believe the IRS later dis-
allowed that deduction.
   The motions seek information as to who within the IRS
reviewed the information petitioners provided, information
about the IRS investigation into the TES, information about
the publishing of the legal memorandum, information related
to the IRS investigation into the sham debt obligation, and
information related to the amount of collected proceeds. In
particular, the motions identify responses to interrogatories
1–6 and document requests 1–5 and 14–16 as either unsatis-
factory or not produced by respondent.
   In the responses, respondent does not deny any of peti-
tioners’ factual allegations. Specifically respondent does not
deny that he investigated the target and its use of the TES
or that his investigation was the result of petitioners’
information. Nor does he deny that there may have been a
‘‘compromise’’ involving numerous issues including the TES
that led to the collection of over $50 million. Similarly, he
does not deny the disallowance of the loss deduction related
to the sham debt obligation.

                          Discussion
  Section 7623 provides for awards to those individuals (i.e.,
whistleblowers) who provide information to the Government
about third parties who are underpaying their taxes. Specifi-
cally, section 7623(b) provides: ‘‘If the Secretary proceeds
206         145 UNITED STATES TAX COURT REPORTS             (204)


with any administrative or judicial action * * * based on
information brought to the Secretary’s attention by an indi-
vidual, such individual shall * * * receive as an award at
least 15 percent but not more than 30 percent of the collected
proceeds * * * resulting from the action (including any
related actions) or from any settlement in response to such
action.’’ We agree with petitioners that their entitlement to
an award turns on two issues: first, whether there was a
collection of proceeds, and, second, whether that collection
was attributable in some way to the information that peti-
tioners provided.
   Rule 70 governs discovery, and paragraph (b) thereof pro-
vides that the scope of discovery is ‘‘any matter not privi-
leged and which is relevant to the subject matter involved in
the pending case.’’ The paragraph further provides: ‘‘It is not
ground for objection that the information or response sought
will be inadmissible at the trial, if that information or
response appears reasonably calculated to lead to discovery
of admissible evidence’’. The standard of relevancy in a dis-
covery action is liberal. See Melea Ltd. v. Commissioner, 118
T.C. 218, 221 (2002). The information and responses peti-
tioners seek are clearly relevant to petitioners’ theory of their
case: They are looking for evidence that will prove that one
or more collections of proceeds from the target were attrib-
utable to the information petitioners provided.
   As stated, respondent does not deny petitioners’ factual
allegations, nor does he argue that the information sought
would be irrelevant to the questions of whether there were
collections of proceeds and whether those collections were
attributable to petitioners’ information. Rather, his relevance
objection is based solely on a generalized view that our scope
of review should be limited to the ‘‘administrative record’’
and the information petitioners seek is outside that record.
Respondent’s argument is not a sufficient basis to deny peti-
tioners’ discovery requests. Even were we to agree with
respondent as to the scope of review, he cannot unilaterally
decide what constitutes an administrative record. See
Thompson v. DOL, 885 F.2d 551, 555 (9th Cir. 1989); Ten-
neco Oil Co. v. DOE, 475 F. Supp. 299, 317 (D. Del. 1979).
How could evidence related to whether there was a collection
of proceeds and whether that collection was attributable to
the whistleblower’s information not be part of any purported
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administrative record? Any such evidence goes to the very
basic factual inquiries required by section 7623(b). Respond-
ent’s lack of direct response to petitioners’ motions appears
to indicate that the current ‘‘administrative record’’ is incom-
plete. 2 See Tenneco Oil Co., 475 F. Supp. at 317–318
(allowing discovery to complete the administrative record);
see also Asarco, Inc. v. EPA, 616 F.2d 1153, 1160 (9th Cir.
1980) (‘‘The court cannot adequately discharge its duty to
engage in a ‘substantial inquiry’ if it is required to take the
agency’s word that it considered all relevant matters.’’); Ad
Hoc Metals Coal. v. Whitman, 227 F. Supp. 2d 134, 137
(D.D.C. 2002) (‘‘The Court finds that EPA in fact did consider
several of the documents that plaintiffs have identified and
that the record should be supplemented to add certain docu-
ments incorrectly omitted from the administrative record.’’).
  We do not have before us a situation where petitioners
want information or want us to review information that was
not before the agency at the time it made its decision. Cf.
FPC v. Transcon. Gas Pipe Line Corp., 423 U.S. 326, 331
(1976). Nor are we considering a situation where relevant
evidence may still need to be developed by the agency. Id. at
333. We believe that: (1) the information already exists, (2)
is in the IRS’ hands, and (3) should be included in an
administrative record compiled for purposes of making a
determination of petitioners’ claim.
  There being no further objections before us, and given that
we find petitioners’ discovery requests relevant to the issues
in this case, we will, as stated, grant the motions.
  Cognizant of the importance of the confidentiality concerns
and disclosure restrictions embodied in section 6103, we will
in our order granting the motions include the following rules
and restrictions governing pretrial disclosure of returns,
   2 Sec. 301.7623–3, Proced. & Admin. Regs., is entitled ‘‘Whistleblower ad-

ministrative proceedings and appeals of award determinations.’’ Para. (e)
thereof is headed ‘‘Administrative record’’ and states in pertinent part:
‘‘The administrative record comprises all information contained in the ad-
ministrative claim file’’. Para. (e)(2) thereof describes the content of the ad-
ministrative claim file. Para. (f) thereof states that the ‘‘rule’’ (section) is
effective on August 12, 2014. Neither party mentions the section, and we
assume that it is not in effect with respect to petitioners’ claim. In any
event, we do not purport to interpret the term ‘‘administrative record’’ as
used in sec. 301.7623–3, Proced. & Admin. Regs.
208        145 UNITED STATES TAX COURT REPORTS             (204)


return information, and taxpayer return information (all as
defined in section 6103(b)(1), (2), and (3)) of third-party tax-
payers identified in petitioners’ whistleblower claim.
   1. Respondent shall designate any documents or other
information provided to petitioners and containing returns,
return information, or taxpayer return information (all as
defined in section 6103(b)(1), (2), or (3)) of third-party tax-
payers identified in petitioners’ whistleblower claim as con-
fidential information (confidential information) and mark
such confidential information as ‘‘CONFIDENTIAL—Section
6103 Information Subject to Protective Order’’.
   2. Any person receiving confidential information shall use
such confidential information solely for the bona fide purpose
of conducting this litigation and not for any other purpose
whatsoever. Any failure to comply may expose a person to
sanctions and punishment in the nature of contempt.
   3. Any confidential information shall not be disclosed
directly or indirectly by either petitioners or petitioners’
counsel to any person except for the sole purpose of trial
preparation and in accordance with the provisions of the
protective order.
   4. When providing confidential information to other per-
sons for trial preparation, petitioners and their counsel must
provide a copy of this order to the person receiving confiden-
tial information and inform the person that he or she must
comply with the terms of the order. Before providing con-
fidential information, petitioners and their counsel shall
obtain the person’s signature on a copy of the order, followed
by a business or home address of that person at which
service of process can generally be made during business
hours. Petitioners and their counsel shall retain the signed
copy of the order until one year after the decision in this case
becomes final.
   5. Petitioners, petitioners’ counsel, and any other persons
who receive confidential information shall, when the resolu-
tion of this case becomes final within the meaning of section
7481(a), return all copies of any confidential information to
(204)   WHISTLEBLOWER ONE 10683–13W v. COMMISSIONER        209


respondent or certify in writing to respondent the destruction
of all confidential information.
                          An appropriate order will be issued.

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