investigatory purposes. Allegedly an informer prompted the IRS to investigate Mr. Kurland. A similar tax investigation involving other negligence lawyers was held to be in bad faith by Judge Fogel in United States v. Cortese, No. 76-3941 (E.D. Pa., filed April 28, 1978). Since that case is presently on appeal to the Third Circuit and since Judge Fogel apparently did not have the benefit of the guidance of LaSalle and Genser I and Genser II, I conclude that United States v. Cortese is not binding upon my decision here. In view of the reluctance of the Supreme Court in LaSalle to impute institutional bad faith to the IRS based on the improper conduct of an IRS agent, it follows that a mere allegation of governmental bad faith, which is based on an informer's intent, does not amount to an abuse of process assertion.
The government's complaint and affidavits established a prima facie showing of good faith as required by Powell in alleging that "the investigation is being conducted for a legitimate purpose and the information being sought may be relevant to that purpose [and that] [the] plaintiffs have complied with the administrative procedures required by the Internal Revenue Code of 1954, as amended, 26 U.S.C." Affidavit of James W. Cinelli, Jr., Special Agent, pg. 2, 3.
According to United States v. McCarthy, 514 F.2d 368 (3d Cir. 1975), after the IRS makes this showing, the burden shifts to the taxpayer to put forth defenses or show that enforcement of the summons would be an abuse of process. This burden, described by the Supreme Court in LaSalle as heavy, 438 U.S. 298, 98 S. Ct. 2357, 2367, 57 L. Ed. 2d 221,
is not satisfied by the taxpayer's bold assertion that the IRS summons is tainted by information supplied by an informant who is improperly investigating negligence lawyers in Philadelphia without any indication that this bad faith could be attributed to the IRS as an institution. Additionally, no recommendation to the Department of Justice has been made nor is presently contemplated. To the extent that the taxpayer has a defense of abuse of process the proper place to raise it is at trial as the Court in Donaldson
recommended and as the taxpayer did in Genser I and Genser II.
Although the Third Circuit has not been presented with a taxpayer's request to intervene based on abuse of process in a summons enforcement proceeding, the court in Genser I apparently
approves of the approach adopted by many other circuits and first enunciated by the Supreme Court in Donaldson, postponing until trial a taxpayer's challenge to the propriety of a third party summons. Genser I, 582 F.2d 292, 303 and n. 18 (3d Cir. 1978). The obvious purpose in this postponement is to prevent unnecessary delays in an IRS investigation at a stage where a taxpayer's outcries are pure speculation. As the Donaldson court noted:
Any other holding, of course, would thwart and defeat the appropriate investigatory powers that the Congress has placed in "the Secretary or his delegate." When Grady's summonses were issued to Mercurio and to Acme, Donaldson was not under indictment and, indeed, no recommendation had been made for his prosecution. That he might be indicted and prosecuted was only a possibility, no more and no less in his case than in the case of any other taxpayer whose income tax return is undergoing audit. Prosecution will necessarily depend on the result of that audit and on what the examination and investigation reveal. 400 U.S. at 534-35, 91 S. Ct. at 544.
A policy which mandates an evidentiary hearing in every case in which a taxpayer at the summons enforcement stage attempts to intervene alleging abuse of process would cause lengthy delays in the IRS investigatory process and place a tremendous burden on the courts. Such a procedure would "cast doubt upon and stultify the Service's every investigatory move." Donaldson v. United States, Id. at 531, 91 S. Ct. at 543.
For the reasons expressed in this memorandum, I will order the IRS summons against Manchel, Lundy and Lessin enforced and deny taxpayer's motion to intervene.
AND NOW, this 21th day of June 1979, after hearing and consideration of briefs of counsel, it is hereby ordered that taxpayer Kurland's motion to intervene is denied for the reasons set forth in the accompanying memorandum.
AND NOW, this 21th day of June, 1979, after a hearing in which the defendant presented no reason why it should not produce the required information, it is hereby ordered that defendant, Manchel, Lundy & Lessin, obey the summons served upon it on May 2, 1978, by producing books, records and other information required by said summons, before Revenue Officer Cinelli, or any other proper officer of the Internal Revenue Service at a place and time as may be fixed by the Revenue Service. Pursuant to 26 U.S.C. § 7210 the United States of America can recover its costs incurred in the enforcement of the summons.