The Tax Court’s September 16th opinion echoes what every whistleblower litigating in Tax Court knows; the IRS’s Whistleblower Administrative File is insufficient.  The petitioners in this case moved to compel production of documents and responses to interrogatories that were requesting information at the would show whether the IRS used their information to collect tax, penalties, interest, or additional amounts.  The IRS filed virtually identical responses to both motions stating its sole objection being that the information requested is not contained within the Whistleblower Office’s Administrative File and, therefore, beyond the scope of discovery.  The Tax Court disagreed and granted the motions.

Rule 70 governs discovery in the Tax Court.  Paragraph (b) states that the scope of discovery is “any matter not privileged and which is relevant to the subject matter involved in the pending case.”  The paragraph further provides: “It is not grounds for objection that the information or response appears reasonable calculated to lead to discovery of admissible evidence.”  The Court stated in its opinion that “the standard for relevancy in discovery is liberal.”  The Court went on to note that the information sought by the petitioners is clearly relevant to their case as the petitioners are looking for evidence that will prove that one or more collections of proceeds are attributable to their information.

The Tax Court addressed the IRS’s argument that the information sought is outside of the scope of review by stating that this argument was not a sufficient basis to deny the discovery requests.  The Tax Court stated: “Even were we to agree with respondent as to the scope of review, he cannot unilaterally decide what constitutes an administrative record.”  The Court reasoned that evidence related to whether there was a collection of proceeds and whether that collection was attributable to the whistleblower’s information goes to the very factual inquiries required by section 7623(b), and an administrative file that lacked such information was incomplete. 

While discovery matters are usually handled with the issuance of an order, the Tax Court issued a division opinion in this instance, giving citable precedence for future whistleblowers that are trying to seek discovery relating to what happened with the information they provided to the IRS.  Hopefully, these continued losses in Tax Court, where the Tax Court finds the administrative file is incomplete and opens discovery beyond the administrative file, leading to more complete administrative files within the Whistleblower Office.

  • Disappointed Whistleblower

    Hallelujah!! We have been waiting for a long time– the tax court got it right. Full transparency and discovery will keep the IRS honest and gives us hope that the program will fulfill the intent of Congress. The only question remains is when will the OCC will stop its scorched earth litigation tactics against the people that are trying to help and realize that this approach does not work and is a waste of scarce government resources.

  • Myheadhurtz

    This is great news for us! I am hoping with the new fiscal year starting this Thursday, Oct 1, this will be an exciting year for us.

  • Linda williams

    Finally some great news.

    Hopefully there will be some other great decisions coming out of the Tax court in the next couple of months, together with a good investigative report and recommendations by the GAO Congressional investigators. The GAO report is predictably delayed. Once issued to Congress it’s in the public doain 30 days after.

    The fact the IRS were prepared to fight this, emphasizes once again how far and how much IRS senior managagament and IRS Counsel are prepared to limit and undermine the IRS Whistleblower Program. So much for the Chumps who read seed and farm equipment catalogues and believed in the ‘Koskinen is a real friend of the Whistleblower Program IRS marketing crap.’

    A big thank-you to the lawyers who went to court and obtained such a favourable jugment.

  • FcaAfictionado


    Do you know when the GAO report was due?

    I remember (elsewhere on this blog I think), you indicated that the draft report was already in the hands of Sen’s Grassley (or Hatch?) and Wyden.

    I wonder why, and for how much longer, it can be delayed.

    I guess we can hope the report is so damning that Congress is giving the Service an opportunity to save face by getting its house in order by brooming worthless Whitlock for Martin, preparing a plan for implementing the Draino Plunge to Reward Purgatory that Sen. Grassley requested, extracting the CCO from defending the ridiculous lack of of organization, generally missing bias for investigation and prosecution in the Business Divisions of WB provided data, denial after denial and minimization chicanery perpetrated by the WBO, and a general revision of the Service’s asinine policy-ruining regulatory implementation of the 7623 Statute (I.e. abuse of the discretionary 15-30% window, sequester-related punishment of WB’s, denial of rewards for fines related to criminal statute enforcement.)

    Hopefully the long-suspected now-demonstrated incompetence, malfeasance and general lack of good-faith dealing, communication, follow-up, and reward process (that has put-off potential high-quality WB’s like myself) will be totally revamped to remove the temptation for inaction and abuse of discretionary authority to (not) investigate, (not) reward, (not) make WB-attracting* decisions.

    * given the personal and professional risks associated with coming forward, it is difficult to conceive how Congress or the Commissioner could think WB’s could be willing to come forward given the IRS’s seemingly current sub-zero climate toward WB’s.

  • In this era of diminishing IRS resources, well-informed tax whistleblowers hold the key to aiding IRS enforcement actions. The road can be bumpy, but together we can make a difference.

  • Myheadhurtz

    Happy New Years!

    Today is day 1 for the 2016 fiscal year. I am hoping that means that this will be a record year for the Whistleblowers. If the last couple months is any indication, great things are on the horizon. Let’s keep our fingers crossed.

  • Bubba Shawn

    August 20, I received a phone call from the WO announcing that my claim was progressing to the next step. I interpreted that to mean that the hated two year SOL had ended. Hopefully, I will be seeking a determination within the 90 day window from that date.

    Eight years have past since IMailed in my F-211. In that time, we have seen 2 Presidents, 2 Treasury Secrtataies, 4 IRS Commissioners and 2 WO Directors.

    Director Martin recently paid a 30 PERCENT award. Hopefully, he will adopt Erika’s recommendation starting the award percentages at 22 percent.

    Director Martin has a great opportunity to get us whistleblowers paid more and faster. Let us hope that he does.

  • Myheadmurtz

    Congrats Bubba Shawn! Its great to hear someone we know is going to get their award. Hopefully the rest of us will hear something very soon.