In line with the Tax Court’s Whistleblower favorable ruling in Whistleblower 14106-10W v. Commissioner, 137 T.C. 183 (2011), the court formally adopted Rule 345 on July 6, 2012. The new rule has two effective parts, the first deals with Whistleblowers wishing to appeal award determinations anonymously. While the new rule does not significantly expand the decision in Whistleblower 14106-10W, Rule 345(a) does note that a Whistleblower can file the motion to proceed anonymously with or without supporting affidavits or declarations. While a minor point, it does show that a Whistleblower has the right to allege fear of reprisal without an affidavit detailing the specific facts making up the fear. A Whistleblower appealing an award determination should consult with their tax attorney to determine the best approach in their specific case.
The second part of the new rule creates a new administrative burden for Whistleblowers, even those who choose to openly file under their name. Rule 345(b) requires Whistleblowers to redact out the names and other identifying information of the taxpayers on whom they blew the whistle. Whistleblowers will be required to create a redaction log which will be filed under seal with the Tax Court. The court will then decide whether to make the log publicly available. We do not see the new rule having a large impact, other than on the assistant required to create the redaction log and the clerk required to scan it in at the Tax Court. In cases where the Whistleblower wishes to proceed anonymously, information about the target taxpayer will already be redacted. In cases where the Whistleblower does not wish to proceed anonymously, there is nothing stopping the Whistleblower – including the U.S. Tax Court – from shouting the target taxpayer’s name from the rooftops. We are happy to take whatever steps the court feels are necessary to ensure a fair review of IRS award determinations. In fact, the Ferraro Law Firm adopted this procedure while the rule was in proposed form.
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