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In re Sealed Case

United States Court of Appeals, District of Columbia Circuit

July 26, 2019

In re: Sealed Case

          Argued April 2, 2019

          On Appeal from the Order of the United States Tax Court

          Michael F. Qian, appointed by the court, argued the cause as amicus curiae in support of appellant. With him on the briefs were Deanne E. Maynard and Lena H. Hughes, appointed by the court.

          Kathleen E. Lyon, Attorney, U.S. Department of Justice, argued the cause for appellee. With her on the brief were Richard E. Zuckerman, Principal Deputy Assistant Attorney General, and Teresa E. McLaughlin, Attorney.

          Before: Griffith and Srinivasan, Circuit Judges, and Ginsburg, Senior Circuit Judge.


          Ginsburg, Senior Circuit Judge

         The Appellant asked to proceed anonymously before the Tax Court when challenging the decision of the Internal Revenue Service (IRS) to deny his application for a whistleblower award. The Tax Court denied his request, concluding the balance of interests weighed against anonymity because the Appellant is a "serial filer" of whistleblower claims, which he bases upon publicly available information. The Tax Court's rationale was that if it does not "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." Whistleblower 14377-16W v. Comm'r, 148 T.C. 510, 518-19 (2017).

         We first hold we have jurisdiction to hear this interlocutory appeal pursuant to the collateral order doctrine. On the merits, we conclude the Tax Court abused its discretion because identifying the Appellant is not necessary to enable the public to gauge (1) the extent to which serial filers affect the work of the Tax Court or (2) whether any particular petitioner is a serial filer. We therefore remand the case for the Tax Court to reconsider whether the Appellant has otherwise made out a fact-specific basis for protecting his identity under Tax Court Rule 345(a).

         I. Background

         The Appellant is a retired certified public accountant who helps his wife run a financial advisory firm. He has worked in the fields of "tax, accounting, and financial advice" for almost 40 years, including two decades as a partner in an accounting firm. Since at least 2010 the Appellant, using information gleaned from public financial records, claims to have noticed accounting irregularities in the filings made with the Securities and Exchange Commission (SEC) by a publicly traded corporation (the Taxpayer), which led him to conclude the Taxpayer had underpaid its taxes by misrepresenting its sales. The Appellant shared this information with the IRS and then filed an application for a whistleblower award pursuant to 26 U.S.C. § 7623(b), which permits any individual who has provided the IRS with information about an underpayment of tax to receive a monetary award if his information enabled the agency to collect additional tax revenue or other proceeds.

         The IRS investigated the Taxpayer, all the while keeping the Appellant's identity confidential. In 2016 the IRS denied his claim for a whistleblower award, explaining that its audit of the Taxpayer did not yield any additional proceeds.

         The Appellant petitioned the Tax Court for review of that decision. Whistleblower 14377-16W, 148 T.C. at 510-11. In addition, he asked to proceed anonymously under Tax Court Rule 345(a), which permits the petitioner in a whistleblower action to file a motion "setting forth a sufficient, fact-specific basis for anonymity." In pleadings and a declaration filed with the Tax Court, the Appellant claimed that disclosure of his identity would cause "severe damage" to his reputation, in a field in which "known whistleblowers are routinely blacklisted by clients." Disclosing his name, he said, would "jeopardize [his] representation of current clients [and] of any future client prospects," cause him and his family to "suffer severe financial harm," "have a negative impact on [his] domestic relationship with [his] spouse," and "elicit harsh and arbitrary retribution by state authorities" because some of his claims before the IRS "involve parties very close to important political figures."

         The Tax Court denied the Appellant's motion to proceed anonymously. Id. In reaching its decision, the Tax Court first compared the Appellant's situation to that of five prior petitioners who were allowed to proceed anonymously and explained the Appellant's justifications for anonymity were not sufficiently "fact-specific" to satisfy Rule 345(a):

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.... [H]is 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.

Id. at 517. The Tax Court went on, however, to say it would have allowed him to proceed anonymously were it not for his being the "unusual claimant" who has filed multiple whistleblower claims based upon ...

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