Tax Court in Brief | Berenblatt v. Comm’r | Whistleblower Record Supplementation and Grand Jury Secrecy

Berenblatt v. Commissioner, T.C. Memo. 2026-75 | August 27, 2026 | Copeland, J. | Dkt. No. 7208-17W

Short Summary

Berenblatt traded foreign exchange starting in 1992. In 2000 someone pitched him a “Foreign Exchange – digital options” shelter, also known as a short options strategy, sold as a lawful way to cut taxes. He funded an account, then studied the product and concluded that the digital option was not economically an option at all because the payout “would never materialize.” He defunded the account.

In late 2007 IRS Criminal Investigation interviewed him once, having subpoenaed records that named him as a potential investor. By then CID had already secured a $76 million fine from a law firm and a $456 million deferred prosecution agreement from a bank — both of which Mr. Berenblatt later identified as target taxpayers.

In 2015, after years of publicity about the government’s collections, he filed a Form 211 claiming his interview had handed the IRS the economic substance doctrine and reversed the course of the prosecutions. The Whistleblower Office asked the interviewing Special Agent, who said otherwise: the investigation had been running two years, Mr. Berenblatt supplied no documents, he never testified at either criminal trial, more than 100 witnesses had already been interviewed, and the relevant analysis had already been done from subpoenaed records. The WBO denied the claim in 2017.

This opinion resolved three motions filed nine years into the resulting Tax Court case: to supplement the administrative record, for in camera review of grand jury material, and to take judicial notice of fourteen proposed adjudicative facts. The Court denied all three.

Key Issues

Whether documents obtained in discovery, created after the WBO determination, or drawn from the criminal trial record may supplement the administrative record in a section 7623(b) whistleblower case.

Whether the Court should conduct in camera review of grand jury materials to assess objections under section 6103 and Federal Rule of Criminal Procedure 6(e).

Whether judicial notice can substitute for supplementation in a record rule case.

Primary Holdings

Supplementation requires the movant to fit one of the three categories set out in City of Dania Beach v. FAA, 628 F.3d 581, 590 (D.C. Cir. 2010). Mr. Berenblatt did not.

Access to grand jury materials, even in camera, is governed by Rule 6(e). The judicial proceeding exception in Rule 6(e)(3)(E)(i) would not have permitted the WBO or the Court to reach those materials in evaluating this claim, and Mr. Berenblatt did not demonstrate the particularized need required by United States v. Procter & Gamble Co., 356 U.S. 677 (1958).

In a record rule case, proposed adjudicative facts offered to supplement the administrative record must satisfy the City of Dania Beach standard. They did not.

Key Points of Law

An administrative record in a whistleblower case can be expanded in two ways: completed, by adding material that should have been in the record but the agency left out, or supplemented, by adding extra-record evidence that was never before the agency. Van Bemmelen v. Commissioner, 155 T.C. 64, 73 (2020). The distinction drives everything that follows.

The Tax Court appropriately limits review of whistleblower award determinations to the administrative record, though that does not license the WBO to exclude adverse documents deliberately or negligently. Estate of Insinga v. Commissioner, 149 F.4th 709, 722 (D.C. Cir. 2025). Supplementation is the exception rather than the rule, available where the agency deliberately or negligently excluded documents that may have been adverse to its decision, where background information is needed to determine whether the agency considered all the relevant factors, or where the agency failed to explain its action so as to frustrate judicial review.

The background information exception is not a catchall. It reaches material explaining complex technical questions outside the ordinary purview of courts, or clarifying information already before the agency. Bunker Hill Co. v. EPA, 572 F.2d 1286, 1292 (9th Cir. 1977); Ass’n of Pac. Fisheries v. EPA, 615 F.2d 794, 811 (9th Cir. 1980).

Documents created after the agency acted cannot supplement its record. “It is black-letter administrative law that in an Administrative Procedure Act case a reviewing court should have before it neither more nor less information than did the agency when it made its decision.” New LifeCare Hosps. of N.C., LLC v. Becerra, 7 F.4th 1215, 1224 (D.C. Cir. 2021).

Notably, Treasury Regulation § 301.7623-3(e)(2) lists what the administrative claim file will always include, and subdivision (ii) covers “[c]opies of all debriefing notes and recorded interviews held with the whistleblower.” The Commissioner argued that this reaches only a “taint debriefing” conducted by the WBO or an operating division to follow up on a Form 211, citing Internal Revenue Manual 25.2.2.4.4(3). The Court declined to read that limit into the text. Regulations are interpreted as statutes are, and where the text is plain the inquiry stops. Guardian Indus. Corp. v. Commissioner, 143 T.C. 1, 12 (2014); Robinson v. Shell Oil Co., 519 U.S. 337, 340 (1997). The Court also held that “recorded interviews” covers interviews recorded in handwritten notes, seeing no sensible distinction between notes and audio.

The regulation “creates only a floor, not a ceiling, on the relevant components of a whistleblower record.” Estate of Insinga, 149 F.4th at 725.

On grand jury access, United States v. Baggot, 463 U.S. 476 (1983), held that an IRS civil examination is not preliminary to or in connection with a judicial proceeding, so the Rule 6(e)(3)(E)(i) exception does not open for it. A WBO investigation of an award claim occupies the same position. Because the WBO had no authority to reach the grand jury records, those records could not have formed part of the administrative file, and in camera review would serve no purpose.

Particularized need requires the movant to show that the materials are needed to avoid possible injustice in another judicial proceeding, that the need for disclosure outweighs the need for continued secrecy, and that the request is structured to cover only material so needed. United States v. Sells Eng’g, Inc., 463 U.S. 418, 443 (1983); Douglas Oil Co. v. Petrol Stops Nw., 441 U.S. 211, 222 (1979). The standard from United States v. Zolin, 491 U.S. 554 (1989), which governs in camera review of materials claimed to be attorney-client privileged, does not transfer to grand jury material.

Judicial notice is “typically an inadequate mechanism for a court to consider extra-record evidence” in a record rule case. Dist. Hosp. Partners, L.P. v. Sebelius, 971 F. Supp. 2d 15, 32 n.14 (D.D.C. 2013). Judicial notice of another court’s proceedings ordinarily extends to procedural facts — that a case was filed, its docket number, counsel of record, the presiding judge, the entry of judgment, the text of an opinion. Petzoldt v. Commissioner, 92 T.C. 661, 674–75 (1989). Grand jury proceedings are not part of the public record and are different in kind.

Insight

Section 7623(b) litigation is administrative law in the tax context.

The structural problem for whistleblowers is circular. The award turns on whether the information the claimant gave substantially contributed to the collection. The proof of contribution lives in the investigative and prosecutorial files. Those files are not the administrative record unless the WBO collected them, and the WBO has no obligation — and sometimes no authority — to collect them. Mr. Berenblatt spent nine years and three motions trying to break that circle from the outside, through discovery, then in camera review, then judicial notice. And each attempt met the same answer: the record is what the agency had.

The practical consequence runs entirely to the front end of a claim. Everything a claimant wants a court to weigh has to go into the Form 211 submission. Mr. Berenblatt’s own client binder of transactional documents and his information questionnaire were in his possession the whole time. The Court noted that he could have included them and did not, and then declined to let him add them later because documents he controlled and omitted are not documents the agency excluded. Anyone assembling an IRS whistleblower claim should read that paragraph twice before deciding what to attach.

The taint debriefing holding is the piece with forward value. Treasury Regulation § 301.7623-3(e)(2)(ii) requires the claim file to include debriefing notes and recorded interviews with the whistleblower, and the Commissioner’s narrower reading — post-Form 211 debriefings only — did not survive the plain text. Mr. Berenblatt lost on it only because his interview preceded his claim by seven years and was not conducted because of it. On the more common facts, where the operating division interviews a claimant after the submission, the notes belong in the record as a matter of regulation, and a whistleblower now has a citation for saying so. Our brief of Whistleblower 972-17W v. Commissioner takes up the related question of unredacted access to what the record contains.

Worth noting what this opinion does not decide. It rules on motions, not on the merits of the award claim, and it expressly declines to pass on the validity of the regulation’s definition of the administrative record because no party challenged it. The underlying question — whether a witness who explains why a transaction lacks economic substance has contributed to a collection that followed — is still open in this case.

The full opinion is posted at CourtListener. More weekly briefs are collected in The Tax Court in Brief archive, and Freeman Law’s Tax Court litigation attorneys handle whistleblower award cases nationwide.

This article is for general information only and is not legal advice. Reading it does not create an attorney-client relationship. Tax outcomes turn on specific facts, and the law changes. Consult qualified counsel about your own situation.