Tax Court In Brief | Whistleblower 972-17W v. Commissioner | Whistleblower Entitled To Unredacted (Mainly) Administrative Record

• Published date: 18 July 2022
• Subject Matter: Employment and HR, Tax, Tax Authorities, Whistleblowing
• Law Firm: Freeman Law
• Author: Freeman Law

The Tax Court in Brief - July 11th - July 15th, 2022

Freeman Law's "The Tax Court in Brief" covers every substantive Tax Court opinion, providing a weekly brief of its decisions in clear, concise prose.

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Tax Litigation: The Week of July 11th, 2022, through July 15th, 2022

• Estate of DeMuth, v. Comm'r, T.C Memo. 2022-72 | July 12, 2022 | Jones, J. | Dkt. No 18724-19
• Ziroli v. Comm'r, T.C. Memo. 2022-75 | July 14, 2022 | Nega, J. | Dkt. No. 1041-20
• Larochelle and Larochelle v. Commissioner T.C. Summary Opinion 2022-12 | July 12, 2022 | Leyden | Dkt 10416-20S

Whistleblower 972-17W v. Comm'r, 159 T.C. No. 1 | July 13, 2022 | Toro, J. | Dkt. No. 972-17W

Opinion

Short Summary: A whistleblower (WB) provided information to the IRS under section 7623. Based on this information, the IRS initiated actions against three taxpayers and collected proceeds. However, the IRS Whistleblower Office (WBO) denied WB's claim for a mandatory award under section 7623(b). WB filed a petition with the United States Tax Court, challenging the WBO's determination.

The Tax Court ordered the IRS to file unredacted copies of the administrative record of the three taxpayers. The IRS filed a redacted copy of the administrative record and requested that the court excuse him from filing an unredacted copy due to section 6103. After the Tax Court ordered the IRS to submit the unredacted copy for review in camera, the IRS moved for the court to modify its order, arguing again that section 6103 does not permit the IRS to disclose to the court the information that the IRS redacted.

Key Issues:

• Whether the Tax Court has subject-matter jurisdiction to a claim under section 7623 when a whistleblower submits information to the WBO, the IRS uses such information to initiate an investigation, and the IRS collects proceeds from the information.
• Whether section 6103 prohibits the IRS from disclosing the target's unredacted administrative file in a section 7623 proceeding.

Primary Holdings:

• If the IRS uses information provided to it from the WBO and opens an investigation and collects tax proceeds from the information, the Tax Court has subject-matter jurisdiction to review the WBO's subsequent determination to reject an award.
• Section 6103(h)(4)(A) authorizes disclosure of a third-party taxpayer's unredacted administrative record in cases under section 7623.

Key...