Opinion
25539-10W
08-18-2022
ALBERT G. HILL, III, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER
Peter J. Panuthos Special Trial Judge.
On June 3, 2022, petitioner filed a Motion to Supplement the Record to Include the Testimony of IRS Employees Who Had Access to Petitioner's Information in the Administrative Record. On July 1, 2022, respondent filed an Objection to Motion to Supplement the Record.
Petitioner seeks to supplement the administrative record with witness testimony. Specifically petitioner seeks to include testimony of IRS employees (or former IRS employees) who received information from petitioner and were involved in the target taxpayer's estate tax audit and the appeal of the denial of the target taxpayer's claim for refund. This includes the witness testimony of: (1) Cynthia Camuel, the IRS estate tax attorney overseeing the audit, (2) James Hogan, the IRS chief counsel attorney responsible for the private letter ruling in the estate tax audit, and (3) the IRS Appeals Officer responsible for the appeal of the target taxpayer's claim for refund.
Our review is guided by regulations that detail what evidence should be included in the administrative record. Treas. Reg. Section 301.7623-3(e)(1) provides that the administrative record "comprises all information contained in the administrative claim file that is relevant to the award determination and not protected by one or more common law or statutory privileges." The administrative claim file encompasses a number of enumerated items, including among others:
(1) The Form 211, "Application for Award for Original Information," filed by the whistleblower and all information provided by the whistleblower (whether provided with the whistleblower's original submission or through a subsequent contact with the IRS).
(2) All notes, memoranda, and other documents made by officers and employees of the Whistleblower Office and considered by the official making the award determination.
(3) All correspondence and documents received by the Whistleblower Office from the whistleblower (and the whistleblower's legal representative, if any) in the course of the whistleblower administrative proceeding.
(4) All other information considered by the official making the award determination. Treas. Reg. § 301.7623-3(e)(2).
In reviewing whistleblower determinations for abuse of discretion under section 7623(b), we generally limit our review to the administrative record before the Internal Revenue Service (IRS) Whistleblower Office (WBO) at the time of the determination. See Kasper v. Commissioner, 150 T.C. 8, 14-17, 20 (2018). In limited circumstances, we may allow the parties to supplement the administrative record. See id. at 20-21. Parties may seek supplementation (1) to provide "evidence that should have been properly a part of the administrative record but was excluded by the agency;" or (2) to add "extrajudicial evidence that was not initially before the agency but the party believes should nonetheless be included in the administrative record." Van Bemmelen v. Commissioner, 155 T.C. 64, 73 (2020) (quoting Animal Legal Def. Fund v. Vilsack, 110 F.Supp.3d 157, 160 (D.D.C. 2015)). Here, petitioner seeks supplementation of the administrative record with materials from both categories of evidence.
An agency is entitled to a presumption of official regularity that it properly designated the complete administrative record. Van Bemmelen, 155 T.C. at 74. However, an agency "cannot unilaterally decide what constitutes an administrative record" in the first instance. Whistleblower One 10683-13W v. Commissioner, 145 T.C. 204, 206 (2015). To rebut the presumption that the administrative record has been properly designated as complete, a party must make a substantial showing that the evidence to be supplemented was considered by the agency in making its determination and thus should be part of the record. See Van Bemmelen, 155 T.C. at 74-75. The party seeking supplementation cannot merely make the conclusory assertion that materials "were before an agency when it made its decision." Marcum v. Salazar, 751 F.Supp.2d 74, 78 (D.D.C. 2010). Instead, the party "must identify reasonable, non-speculative grounds for its belief that the documents were considered by the agency and not included in the record." Id. (quoting Pac. Shores Subdivision Cal. Water Dist. v. U.S. Army Corps of Eng'rs, 448 F.Supp.2d 1, 6 (D.D.C. 2006)) (emphasis in original).
Supplementing the administrative record with evidence that was not before the agency decisionmaker is an exceptional remedy. See Van Bemmelen, 155 T.C. at 76 (stating that consideration of extrarecord evidence "is the exception, not the rule") (quoting Theodore Roosevelt Conservation P'ship v. Salazar, 616 F.3d 497, 514 (D.C. Cir. 2010)); see also The Cape Hatteras Access Pres. All. v. U.S. Dep't of Interior, 667 F.Supp.2d 111, 112 (D.D.C. 2009) ("A court that orders an administrative agency to supplement the record of its decision is a rare bird."). We may consider supplementing with extrarecord evidence in circumstances where: (1) "the agency deliberately or negligently excluded documents that may have been adverse to its decision;" (2) background information is needed "to determine whether the agency considered all the relevant factors;" or (3) "the agency failed to explain administrative action so as to frustrate judicial review." Van Bemmelen, 155 T.C. at 76 (quoting City of Dania Beach v. FAA, 628 F.3d 581, 590 (D.C. Cir. 2010)).
Petitioner seeks to supplement the record with witness testimony by certain IRS employees who had access to petitioner's information in order to fill purported gaps in the administrative record. Respondent objects on the grounds that witness testimony is not necessary as petitioner had previous opportunity to take the deposition of Ms. Camuel, which has since been included in the record, and also conduct telephone interviews of Mr. Hogan and another IRS employee, Mary Berman.
On May 30, 2014, petitioner filed a Motion to Impose Sanctions, related to respondent's destruction of electronically stored information on Ms. Camuel's laptop. This Court declined to grant that motion, while noting the possibility that certain documents erased from Ms. Camuel's laptop were relevant to the issues in this case. As a result, the Court allowed the administrative record to be supplemented to include additional documents and Ms. Camuel's deposition as the background information could not be provided in any other manner.
The unique circumstances of this case necessitate limited supplementation of the record. As the relevant events occurred more than a decade ago, and due to the destruction of electronically stored information, additional background information is required to determine whether the WBO considered all relevant factors in making its determination. We agree with petitioner that the record should be supplemented.
Upon due consideration and for cause, it is
ORDERED that petitioner's Motion to Supplement the Record to Include the Testimony of IRS Employees Who Had Access to Petitioner's Information in the Administrative Record, filed on June 3, 2022, is granted in that the Court will permit the witness testimony of Cynthia Camuel, James Hogan, and the IRS Appeals Officer responsible for the appeal of the taxpayer's claim for refund, to be included in the administrative record. It is further
ORDERED that the Court will conduct a conference call in the near future with counsel for the purpose of scheduling a time and date for taking testimony of the witnesses who are the subject matter of petitioner's motion.