The late Donald M. Arndt, before he became the late Donald M. Arndt, blew the whistle on a step transaction that covered a couple years (hi, Judge Holmes). While Don blew for Year One, IRS only got the boodle for Years Two and Three. Don’s trusty attorneys want a bunch documents (ditto) covering those years, but IRS says they aren’t in the admin record, hence off-limits.

Judge Albert G (“Scholar Al”) Lauber isn’t buying, yet.

“Respondent contends that the documents petitioner seeks are not subject to section 6103(h)(4)(B) because they were not found within the administrative record compiled by the WBO. See Kasper v. Commissioner, 150 T.C. 8, 20–21 (limiting scope of review in whistleblower cases to administrative record barring exceptions). But a document may be “directly related to” an issue in a whistleblower proceeding, see § 6103(h)(4)(B), whether or not it is contained in the WBO’s own file. In other words, we do not view our ‘record rule’ for whistleblower cases as limiting what sorts of documents the IRS may disclose pursuant to section 6103(h)(4)(B).” Order, at pp. 2-3. (Footnote omitted, but read it. Maybe Section 6103(h)(4)(A), dealing with production for Federal tax proceedings, might play a part here).

For the Kasper backstory, see my blogpost “Two Old Cases,” 1/10/18.

So Don wins, right?

Not quite.

“Although we agree with petitioner that neither section 6103 nor Rule 70 precludes our granting the Motion to Compel, we believe it would be premature to rule on the Motion at this time. The Court recently provided further guidance on ‘whistleblower discovery requests’ in the context of motions to compel. See Berenblatt v. Commissioner, 160 T.C. No. 14 (May 23, 2023). We would find it helpful for the parties to set forth their views as to how (if at all) Berenblatt affects the proper disposition of petitioner’s second Motion to Compel.” Order, at p. 4.

For the Berenblatt story, see my blogpost “The. Bialystok Blower,” 5/24/23. Spoiler alert: it’s good news for Don’s trusty attorneys

Oh yes, the case is Estate of Donald M. Arndt, Deceased, Kathy R. Arndt, Personal Representative,, 1246-16W, filed 6/27/23.