If you want a whistleblower award, you need to show the IRS actually used your tip. Just being first in line doesn’t cut it.
Holding
Long story short: the Tax Court sided with the IRS. Bialer’s Claim? Denied. His three motions to add more paperwork? Also denied.
Why It Matters
An award under section 7623(b) depends on IRS action based on the claimant’s information and proceeds collected as a result. The timing of a submission alone does not establish entitlement.
An audit team’s decision about using information is distinct from the Whistleblower Office’s award determination. Assigning an investigation to an operating division does not transfer the office’s authority to determine awards.
A challenge to an award denial must address the administrative record and the stated basis for denial. Unsupported assertions about priority or internal handling do not overcome evidence identifying another source for the audit.
The Court’s authority to review an award determination does not permit it to order an audit or supervise the IRS’s choice of information to pursue.
Key Facts
Bialer had previously supplied information about dividend-withholding transactions involving his employer, identified in the opinion as Institution 2. That separate matter, Claim S, resulted in a 2015 award under a special agreement. The present decision concerns a different submission, Claim T, involving an institution identified as Target.
In May 2007, Bialer gave IRS personnel information about withholding-tax avoidance, including information concerning Target. He filed Claim T on Form 211 on September 5, 2007. Supporting materials included documents concerning transactions from 1997 and 1999, interview schedules, and correspondence. The claim reached an IRS subject-matter expert in October 2007, but the audit team did not receive it until January 2010.
Another whistleblower, identified as WB1, had independently supplied the IRS with information about dividend tax abuse in 2005. WB1 later provided information to the Senate Permanent Subcommittee on Investigations. The subcommittee’s September 2008 report described dividend-withholding strategies involving several institutions, including Target. WB1 then submitted another award claim addressing the institutions discussed in that report.
The audit team received the Senate report and WB1’s information in December 2008, more than a year before receiving Claim T. It already had Target’s corporate income-tax returns under examination. It opened an examination of Target’s 2005 withholding-tax return in November 2010, determined a deficiency, and collected tax and interest after Target agreed to the findings. The opinion does not state the dollar amount collected.
The audit team found Bialer’s information unhelpful. Its December 2013 evaluation stated that the information added no value and had not been used. The team cited the Senate investigation, its ordinary audit work, and other information as the sources for its examination. Later examinations of Target’s 2006–2008 withholding-tax returns were closed as either survey or no-change cases.
The Whistleblower Office issued a preliminary denial in February 2019. Bialer responded that the IRS may have shared his information with the Senate and prompted the investigation. The office rejected that explanation and issued its final denial on April 5, 2019. Bialer petitioned the Tax Court on May 1, 2019.
Statutory and Regulatory Framework
Section 7623(b) provides mandatory awards when its conditions are met. The IRS must proceed with an administrative or judicial action based on the whistleblower’s information and collect proceeds as a result of the action. Treasury Regulation § 301.7623-1(c)(1) requires specific, credible information supported by available documentation. Speculative submissions do not provide a basis for an award.
The Whistleblower Office administers award determinations. Treasury Regulation § 301.7623-3(c)(8) provides a preliminary-denial process, an opportunity for comments, and written notice of a final denial. Section 7623(b)(4) permits Tax Court review of an award determination.
Here, the Court applies abuse-of-discretion review to the administrative record. That standard asks whether the determination is arbitrary, capricious, or otherwise contrary to law. It does not authorize the Court to substitute its judgment for the office’s. Because the IRS had taken action against Target, jurisdiction was not disputed; whether that action was based on Bialer’s information was a merits question.
Claimant’s Arguments
Bialer argued that the operating division responsible for Target effectively denied his award by June 2008. He maintained that assignment of his information to that division made it the appropriate office to determine the award and that its failure to notify him violated his procedural rights.
He also asserted that he had brought particular tax abuses to the IRS’s attention before anyone else. Earlier in the administrative process, he suggested that his submissions had supplied the information behind the Senate investigation. His motions sought to add internal emails, spreadsheets, tracking entries, and related materials concerning the IRS’s handling of his claim.
Government’s Arguments
The Commissioner argued that the IRS used the Senate report and WB1’s information in its examination of Target. The audit team received those materials before receiving Claim T, found Bialer’s information unhelpful, and did not use it to determine Target’s liability.
The Commissioner maintained that the Whistleblower Office reasonably relied on that record when it denied the award in April 2019. He also opposed further supplementation of the administrative record and sought summary judgment.
Court’s Reasoning
The Whistleblower Office made the award determination. The statute creating the office permits it to assign investigation to another IRS office. That assignment does not transfer its other functions. Section 7623(b) and the regulations identify the Whistleblower Office as the decision-maker for awards, including denials. Its April 5, 2019 letter was the reviewable determination.
An internal audit decision was not a denial of an award. The operating division had been instructed to evaluate the information so the Whistleblower Office could make the award decision. It did not deny Bialer. An uncommunicated choice not to use information could not perform the statutory function of a determination that the whistleblower could appeal.
The claimed 2008 denial did not undermine the record. Bialer inferred an early decision from an undated spreadsheet entry. Instead, the administrative record showed transmission of Claim T to the audit team in January 2010 and its formal evaluation in December 2013. In any event, the decision not to pursue information was an audit decision, not an award determination the Court could review.
The record identified independent sources for the audit. The team received the Senate report and WB1’s information in December 2008 and later reported that Claim T added no value. Bialer’s theory that his submissions caused the Senate investigation did not establish that connection. He did not allege contact with the subcommittee, and the record described WB1’s independent disclosures.
Priority was not the statutory test. Even if Bialer had established that he disclosed Target’s abuses first, he still needed to address whether the IRS acted based on his information. His summary-judgment response did not substantiate his factual assertions with the administrative record or rebut the team’s identification of its information sources. The Court also found that his claimed foreign-withholding-tax-credit issue was not shown to have been reported in Claim T as an issue involving Target.
Further supplementation and remand were unnecessary. The proposed additional documents did not establish that the operating division made an award determination or otherwise show an abuse of discretion in the WBO’s denial. The Court considered their content in evaluating the supplementation requests and concluded that they would not change the result. The record supported the agency’s decision with or without the additional materials, so remand was unnecessary.
Result
The Court sustains the denial of Claim T, grants the Commissioner’s summary-judgment motion, denies the three supplementation motions, and states that an appropriate order and decision will be entered.
The Takeaway
If you’re a whistleblower lawyer, here’s the playbook: tie your client’s tip directly to what the IRS did and the money it collected. Complaining about audit choices or claiming you were first won’t get you paid.
List of Citations
I.R.C. § 7623(b)(1), (4): the action-and-proceeds requirements and judicial review of award determinations.
Treasury Regulations §§ 301.7623-1(c)(1), 301.7623-3(c)(6), (8), and 301.7623-4(a): submission requirements, the denial process, and the Whistleblower Office’s award authority.
Tax Relief and Health Care Act of 2006, Pub. L. No. 109-432, § 406(b), 120 Stat. 2922, 2959–60: created the Whistleblower Office and assigned investigative work.
Kasper v. Commissioner, 150 T.C. 8, 20–23 (2018): administrative-record and abuse-of-discretion review.
Van Bemmelen v. Commissioner, 155 T.C. 64, 73–79 (2020): the distinct standards for completing an administrative record and adding extra-record evidence.
Trongone v. Commissioner, 181 F.4th 85, 90–91 (D.C. Cir. 2026): the distinction between jurisdiction and the merits of the information-to-action connection, and principles governing remand.
Kennedy v. Commissioner, 142 F.4th 769, 774–75, 779 (D.C. Cir. 2025): award review and the IRS’s discretion to commence an action.
Estate of Insinga v. Commissioner, 149 F.4th 709, 718, 722 (D.C. Cir. 2025): administrative-record review and circumstances supporting remand.
Florida Power & Light Co. v. Lorion, 470 U.S. 729, 744 (1985): remand when the record does not support agency action or permit effective review.