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6103(h)(4)(B) Prevents IRS From Refusing to Produce in Response to WB Discovery Requests

03 / 15 / 2019

Richard G. Saffire v. IRS, Docket No. 101-18W (Tax Court, March 12, 2019)

Rule 50(f)--Orders Not Treated as Precedent 

Judge Robert N. Armen, Special Trial Judge

Whistleblowers often find themselves in Tax Court having to try and compel the IRS to produce documents shedding light on how, when, and if the IRS "used" their information in pursuit of targeted taxpayers.  The IRS has used a myriad of defenses to limit what is produced.  In a recent case, Saffire v. IRS, Special Trial Judge Robert N. Armen points out that these IRS' defenses will not work.

For example, the IRS will argue that the whistleblower should just take the IRS's word for it, and "accept" representations from the IRS that they did not use any of the whistleblower's information.  This "trust me--it wasn't yours" defense" won't work, says the Tax Court.  Docket No. 101-18W, at *7.

When the IRS attempts to selectively produce documents and label it the "administrative file" to show that IRS did not use any of the information submitted by the whistleblower, or claim that the there was a second, or alternative source which was the basis of the investigation of the targeted taxpayer, these arguments are likely to be viewed as conclusory, these will not be sufficient.  

The IRS will also argue that requests are overlybroad or unduly burdensome, and will attempt to claim that the information sought is third-party tax return information protected from disclosure by Section 6103, or that it is not directly related to resolution of the issue.  As the Tax Court put it, how could this be--when "a key (if not, the key) to resolving" these issues is whether the IRS used the whistleblower's information.

The IRS is not allowed to "select documents to disclose" only that which supports its position.  Docket No. 101-18W, at *9-10.  

The court's order, allows for redaction of the identity of the alternative source but each and every redaction was to be individually and specifically supported by the specific basis therefor."