Serial Whistleblower Denied Anonymity on June 28, 2017

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Grey Concrete Building, representing Serial Whistleblower

U.S. Tax Court Denied Serial Whistleblower Anonymity

The Tax Court has reminded IRS whistleblowers in a recent decision that the ability to proceed anonymously is not absolute. On June 28, 2017, the U.S. Tax Court denied an anonymous proceeding to Whistleblower 14377-16W after weighing the public interest in knowing who is using the Tax Court to bring serial whistleblower claims against an insufficient fact-specific justification for anonymity.

The whistleblower claim involved a non-employee accountant (CPA) who discovered in public records that several companies were failing to report millions of dollars in income from the sale of gift cards, according to the allegations. The individual brought several whistleblower claims, identifying 50 or so taxpayers, and currently has 11 whistleblower cases pending before the Tax Court. The individual does not work for any of the companies and is retired as a CPA, instead working with his spouse in a registered investment advisory business.

Justifications Were Weak

The Tax Court found that the justifications for providing anonymously were weak because the individual was not working for any of the companies and otherwise did not identify any specific business partner or political figures who would retaliate against him. In good news for other whistleblowers, the Court said that absent the serial usage of the Tax Court, it might just have allowed the individual to proceed anonymously at the early stage in the litigation.

However, the Tax Court declared the public interest in knowing who was repeatedly using the Court greater than this limited personal interest in anonymity. In all likelihood, if the Court had allowed him anonymity in this proceeding, it would have had to do so in the other 10 as well as any additional cases.

Problematic for Larger Cases

The Tax Court’s analysis was a bit problematic for whistleblowers in large cases. In a large and complicated case, with parent corporations, subsidiaries and affiliated entities, plus multiple submissions by the whistleblower to prove tax evasion, the number of “claims” assigned by the IRS can grow quickly. The Tax Court does properly explain in a footnote the process of assigning claims, but the potential for labeling an individual who brings a large and complicated submission as a serial whistleblower nevertheless exists.

In the end, this is an opinion that seems best relegated only to non-employee whistleblowers who are engaged in data mining to bring claims against multiple corporations. Nevertheless, it is a good reminder that all whistleblowers are potentially at risk of having their identity exposed and should properly consider the potential benefits and risks before filing a tip.