CCH NEWSLETTER, Federal Tax Weekly, NO. 41, OCTOBER 16, 2008, Washington Report

Experts predict Tax Court's amended rules may encourage whistleblower actions

Newly amended Tax Court rules may encourage more whistleblowers to come forward, Scott Knott and Gregory Lyman of The Ferraro Law Firm, Washington, D.C., recently told CCH.

The new explanation to Tax Court Rule 340 provides authority for the court to allow a petitioner to proceed anonymously and to seal the record when appropriate in whistleblower actions, Knott and Lyman explained. "As a result of this new language in the Rules, we believe that the Tax Court will be sympathetic to informants by accepting the filing of anonymous appeals of award determinations and then granting our motions to place the record in these matters under seal."

Another issue that was raised in the drafting of the Tax Court Rules is the appropriate standard of review for whistleblower actions. "We believe, and so does the Tax Court as shown in the new rules, that these cases should have full trials."

According to Knott and Lyman, Congress explicitly provided for Tax Court jurisdiction so that informants would not have to rely on the discretion of the IRS. They added that by saying "the appropriate scope of review will be developed in case law," the Tax Court is sending the "clear signal that it does not buy the IRS's administrative record approach."

By George L. Yaksick, Jr., CCH News Staff

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