The U.S. Tax Court ordered the IRS to file unredacted copies of a taxpayer’s returns in a whistleblower case. The court reasoned that, under Code Sec. 6103(h)(4)(A), confidentiality can be waived because the whistleblower proceeding arose out of, or in connection with, determining the taxpayer’s civil or criminal liability.
A whistleblower provided information to the IRS regarding three target taxpayers. The agency initiated actions against the taxpayers and collected proceeds, but the Whistleblower Office denied the accuser’s claim for an award under Code Sec. 7623(b). The whistleblower petitioned the Tax Court for review.
The IRS was ordered to file with the court redacted and unredacted copies of the administrative record, including returns and return information of the target taxpayers. The IRS filed a redacted copy of the administrative record and requested that the court excuse it from filing an unredacted copy to protect Code Sec. 6103 information.
The court told the IRS to submit the unredacted copy for review in camera. The IRS moved to have the court modify its order, arguing that Code Sec. 6103 prohibits the agency from disclosing to the court the information it redacted.
But the court held that Code Sec. 6103(h)(4)(A) does authorize the IRS to submit the unredacted administrative record.
For more information on whistleblower awards, see here.
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