The D.C. Circuit Court has reversed a decision by the Internal Revenue Service (IRS) regarding a whistleblower award claim made by Mary Trongone. This ruling affects how whistleblower claims are evaluated and could influence future claims made under the IRS’s whistleblower program.
Mary Trongone, who represented herself in court, alleged that two taxpayers violated tax laws from 2004 to 2012. She sought a whistleblower award from the IRS, claiming that her information had helped the agency in its investigations. However, the IRS denied her claim, stating that it had already been aware of the misconduct she reported. The court's decision, issued on June 12, 2026, and reissued on July 13, 2026, found that the IRS's reasoning was not supported by the evidence.
This case, identified as Mary Trongone v. Commissioner of Internal Revenue, No. 25-1050, began when Trongone filed a whistleblower application with the IRS. The application alleged that two taxpayers, referred to as Taxpayer 1 and Taxpayer 2, had underpaid their taxes. She submitted a detailed cover letter and supporting documents. The IRS’s Whistleblower Office (WBO) reviewed her application and determined that it could not be awarded because the information was deemed “tainted” or obtained unlawfully.
The IRS had already been investigating the taxpayers when Trongone submitted her claim. Although they collected proceeds from the taxpayers, the WBO concluded that Trongone’s information did not contribute to the investigations. The IRS stated that it had already known about the issues she reported. This led to the denial of her claim, which she then contested in the Tax Court.
In the Tax Court, Trongone requested additional evidence to support her claim for tax years 2013 through 2017, arguing that her information had been used in ongoing investigations. However, the Tax Court denied her request and sided with the IRS, stating that the administrative record supported the IRS's decision.
The D.C. Circuit Court, led by Circuit Judge Karen LeCraft Henderson, found that the IRS’s rationale for denying Trongone’s claim was arbitrary and capricious. The court pointed out that the IRS had not adequately investigated the merits of her application for the later tax years. The court stated, “The existing record does not support that rationale,” emphasizing that the IRS failed to conduct a reasonable inquiry into the merits of Trongone’s application.
The court's ruling highlighted the importance of thorough documentation and consideration in IRS whistleblower cases. It noted that the IRS had produced extensive records for the tax years 2011 and 2012, but had provided a much less detailed record for 2013 through 2017. The court concluded that the IRS should have remanded the case for further investigation into Trongone’s claims.
This ruling is significant as it underscores the need for the IRS to provide adequate justification for its decisions regarding whistleblower claims. It also emphasizes the importance of a complete administrative record when evaluating such claims. The court’s decision may set a precedent for how future whistleblower claims are handled, particularly in ensuring that the IRS conducts thorough investigations before denying claims.
The impact of this ruling extends beyond Trongone’s case. It may encourage other whistleblowers to come forward, knowing that their claims will be given a fair review. The IRS will likely need to reassess its procedures for handling whistleblower applications, ensuring that all relevant information is considered and documented.
Looking ahead, it remains to be seen how the IRS will respond to this ruling. The agency may choose to conduct a more thorough review of Trongone’s application for the tax years in question. Additionally, it is unclear whether the IRS will appeal the decision or if there are related cases pending that could further impact whistleblower claims.
In conclusion, the D.C. Circuit Court's reversal of the IRS's decision in Mary Trongone v. Commissioner of Internal Revenue marks a significant development in the handling of whistleblower claims. The ruling emphasizes the need for transparency and thoroughness in the IRS's evaluation process, potentially leading to changes in how such claims are assessed in the future.