Tax Court in Brief | Berenblatt v. Comm’r | Whistleblower Awards and the Substantial Contribution Standard

Berenblatt v. Commissioner, T.C. Memo. 2026-77 | August 31, 2026 | Copeland, J. | Docket No. 7208-17W

Short Summary

Jeremy Berenblatt sat for one interview with IRS Criminal Investigation in the fall of 2007, during the government’s multiyear prosecution of abusive tax shelter promoters. He was screened as a potential witness, never called, and had no further contact with the IRS. Eight years later, after the government had collected billions, he filed a Form 211 seeking an award tied to at least $1.4 billion in restitution, forfeiture, and settlement proceeds and at least $5.9 billion in unpaid taxes.

The IRS Whistleblower Office denied the claim in full. Judge Copeland granted the Commissioner summary judgment and denied Mr. Berenblatt’s cross-motion, holding that the administrative record supports the Office’s conclusion that Mr. Berenblatt’s information did not substantially contribute to the government’s actions.

This is the merits companion to the Court’s administrative-record decision in the same case earlier this year.

Key Issues

What does a whistleblower have to show for the IRS to have “proceeded based on” his information under section 7623(b)? Does temporal proximity between an interview and later government successes establish a substantial contribution? And does the Whistleblower Office’s initial classification of a claim as “high touch” bind the analyst who later reviews it?

Primary Holdings

The Whistleblower Office’s determination was not arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law. Mr. Berenblatt’s single interview did not substantially contribute to the promoter prosecutions. But-for causation does not satisfy section 7623(b). A classifier’s high-touch designation is a gatekeeping call, not a merits determination. The Commissioner’s Motion for Summary Judgment is granted, and Mr. Berenblatt’s Motion for Partial Summary Judgment is denied.

Key Points of Law

The Court reviews a Whistleblower Office determination on the administrative record under section 706(2)(A) of the Administrative Procedure Act, asking whether the agency stayed within the bounds of reasoned decision-making. Factual determinations stand unless clearly erroneous. Rule 121(j) recognizes that the ordinary summary judgment standard of Rule 121(a)(2) does not apply in record-review cases, and the parties instead supply statements of fact keyed to the administrative record. As the D.C. Circuit put it earlier this year in Trongone, the decision must be reasonable and reasonably explained, and it fails that test if it runs counter to the evidence before the agency.

The substantive standard comes from Treas. Reg. § 301.7623-2(b)(1). The IRS proceeds based on a whistleblower’s information when that information substantially contributes to an action against a person the whistleblower identified—when the IRS initiates a new action, expands the scope of an ongoing one, or continues to pursue one it would not have pursued but for the information. It does not proceed based on the information when it merely analyzes what was provided or investigates a matter the information raised. The D.C. Circuit upheld the regulation after Loper Bright in Lissack.

The record here ran against Mr. Berenblatt in both what it contained and what it lacked. The interviewing special agent completed a Form 11369 answering every contribution question in the negative: the Service did not use the information to develop document requests, did not use it to validate responses, and received nothing that general investigative techniques would not have produced. His narrative noted that the investigation was two years old, that more than a hundred people had already been interviewed, and that a substantial volume of subpoenaed records had already been analyzed. He attached contemporaneous press coverage showing that a law firm Mr. Berenblatt identified had paid a $76 million penalty in March 2007, and that a bank he identified had been under investigation since May 2006 for engineering losses through options designed to lose money—the same theory Mr. Berenblatt claimed to have supplied first.

Inaction was informative too. He produced no documents, was never called as a witness, and was never recalled for a second interview. Judge Copeland wrote that although Mr. Berenblatt argues he paved the yellow brick road for the IRS, he conveniently ignores that the IRS had already found the proverbial wizard.

Four counterarguments failed. The “action requirement” of section 7623 simply restates the substantial-contribution question, and the relevant action was the promoter prosecution in the aggregate. The corroboration theory — that his information gave the government confidence to proceed with what it already knew—runs into Example 3 of Treas. Reg. § 301.7623-2(b)(2), which denies an award to a whistleblower whose information only confirmed the correctness of the IRS’s adjustments. But-for causation is not enough, as Lissack held. And the Internal Revenue Manual does not have the force of law and confers no rights on taxpayers, so IRM noncompliance cannot establish the Office’s error.

On the classification argument, the Court explained the architecture. A classifier is a gatekeeper who decides whether a Form 211 warrants further review, not whether an award is due. If a classifier’s designation controlled, there would be no need for the Whistleblower Office at all. The high-touch rating is what got Mr. Berenblatt’s claim assigned to a senior analyst; it is not a finding that the claim has merit.

Mr. Berenblatt’s reliance on Trongone also missed. That case reversed as to a period the agency had failed to address at all, applying the Chenery rule that an agency decision can be judged only on the rationale it gave. Here the Office compiled hundreds of pages describing the interview, the course of the prosecutions, and Mr. Berenblatt’s role in them.

Insight

Whistleblower practice lives and dies on chronology. The most valuable thing a claimant brings is information the IRS does not already have, and the most damaging fact in a file is a news article predating the submission. Anyone considering a Form 211 should build the timeline first—what the government knew, when it knew it, and from whom—because the Whistleblower Office will build that timeline whether the claimant does or not.

The second point is about how these cases get decided. Record review means the Form 11369 is close to dispositive, and challenging the agent who filled it out requires a concrete showing of bad faith rather than a disagreement about what happened in a room in 2007. Mr. Berenblatt argued the form should have been completed by the lead agent, that it named too few taxpayers, and that its narrative was ipse dixit. None of that moved the Court.

Judge Copeland’s footnote 5 is the line that will get quoted. An individual who is sought out by the government, rather than one who seeks out the government of his own volition, does not seem to be blowing the whistle. It isn’t a holding. It is a fair description of why claims like this one are hard.

Our primer on the IRS Whistleblower Program covers the award mechanics, and the IRS describes its own process at the Whistleblower Office. Freeman Law’s Tax Court litigation attorneys handle whistleblower appeals. Prior weeks are collected at The Tax Court in Brief, and the full opinion is available from CourtListener.

The information contained in this post is general in nature, is provided for informational and educational purposes only, and does not constitute legal advice or create an attorney-client relationship. The law is fact-specific and subject to change. Consult qualified counsel regarding your particular circumstances.