In Uncategorized on 05/20/2014 at 17:34

It’s Not As Remote As You’d Think

 Warning- this is a rant.

Two whistleblowers get to keep their anonymity, as Judge Kroupa casts the Cloak of Invisibility upon Whistleblower 10949-13W, 2014 T. C. Memo. 94, 5/20/14, and Whistleblower 11332-13W, 2014 T. C. Memo. 92, filed 5/20/14.

There’s a third whistleblower similarly protected by Judge Kroupa today, but the facts there differ sufficiently from the other two cases that I want to concentrate on those.

You sure you want to blow the whistle? It might be seriously hazardous to your health.

“During the whistleblower’s employment, the whistleblower learned of a tax structure involving the whistleblower’s employer and several related entities and subsidiary companies (targets). When the whistleblower raised concerns over the tax structure to the whistleblower’s employer, the whistleblower’s employer used physical force and armed men to intimidate the whistleblower and prevent disclosure. The whistleblower reported the tax scheme to the Government and for several years assisted the Government in its investigation of targets. Based partly on the whistleblower’s information, the Government eventually recovered more than $30 million in taxes, penalties and interest.” 2014 T. C. Memo. 94, at p. 2-3.

So why is the whistleblower in Tax Court? $30 million should yield him/her a nice return. Since Section 7623 allows at least a 10% bonus, $3 million bucks, even if taxable at ordinary rates, isn’t too shabby.

Except the whistleblower probably got the usual “we can’t tell you the reason to protect the privacy of the tax dodgers and their armed buddies, but the information was all public, or it didn’t help us, and anyway this isn’t a determination”. The opinion doesn’t say that, of course, but why petition for an extra couple of bucks if it means spilling your guts? And I mean literally spilling your guts.

So the whistleblower wants to test the validity of IRS’ stonewalling. But to do so, he/she needs to proceed anonymously.

Here’s why: “The whistleblower was aware that the Government investigated targets for potential ties to terrorist groups. Additionally, Department of Justice attorneys informed the whistleblower that targets were connected to organized crime and terrorism and could resort to physical force or harm in connection with their activities. The whistleblower received a death threat from one of the targets through its counsel. On one occasion the whistleblower used armed guards for safety when the whistleblower traveled abroad. Additionally, targets have lodged numerous litigation threats against the whistleblower relating to the whistleblower claims.” 2014 T. C. Memo. 94, at p. 3.

You want more? “The whistleblower asserts that revealing the whistleblower’s identity would result in the risk of retaliation, social and professional stigma, economic duress and personal safety. Specifically, the whistleblower asserts that disclosing the whistleblower’s identity will result in professional stigma and impair the whistleblower’s livelihood by alienating the whistleblower’s potential clients and business contacts. Finally, the whistleblower asserts that the whistleblower is of an age and station in life that necessitates continued employment. The whistleblower filed the motion to proceed anonymously at the same time the whistleblower filed the petition.” 2014 T. C. Memo. 94, at p. 4.

IRS filed no notice of objection to the motion. Big of them, ya think?

Judge Kroupa: “In short, the nature and severity of potential harm that could befall the whistleblower outweigh the societal interest in knowing the whistleblower’s identity.” 2014 T. C. Memo. 94, at p. 6.

2014 T. C. Memo. 92 is even more interesting.

“After learning that the whistleblower was subpoenaed to provide documents to the Government, targets filed multiple retaliatory actions against the whistleblower to determine the whistleblower’s role in the investigation and to silence the whistleblower. The whistleblower incurred significant personal expense, spent time and suffered professional reputational costs defending against these actions that were designed to intimidate and threaten the whistleblower.” 2014 T. C. Memo. 92, at pp. 3-4.

Now get this: “After learning of the individuals and entities involved, the Government offered to place the whistleblower in the witness protection program. The whistleblower declined placement in the witness protection program, but requested and was granted confidential informant status. The whistleblower was also forced to hire counterterrorism experts to advise the whistleblower’s family on safety and protect the whistleblower on trips abroad. This protection cost the whistleblower tens of thousands of dollars. Despite their efforts, targets have not discovered the identity of the whistleblower. They were aware only that the whistleblower was subpoenaed by the Government.” 2014 T. C. Memo. 92, at p. 4.

Leaving aside the fact that if the bandits are not terminally stupid, they’ve figured out who the whistleblower is from this public discussion of the case, I must ask why this person has to go to Tax Court, if he handed the IRS enough to nail these crooks for $30 million.

These opinions should have been sealed, for a start. More to the point, they should never have had to be written.

Exactly what is the Whistleblower Office doing out there, besides watching the Ogden, Utah sunset?

So what’s the point?

If you try to help the IRS collect, and your information gets them $30 million they’d have had no way of getting otherwise, and you have to tell your life story in Tax Court (so there’s an opinion for the world to read), you’re risking your life, and your family’s life, for nothing.

Great public policy, ya think?

  1. This is weird. The judge grants an uncontested motion to seal the case, but he publicly discusses its details? Did he have to do that, or could he just have said, “motion granted”?


  2. It was Judge Kroupa, so the Judge was “she.” She is best known for having pled guilty to tax fraud to the extent of $450K.


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