The opinion of the court was delivered by: DITTER
The question in this case is whether a taxpayer may intervene in a proceeding brought by the government to obtain financial records kept by a law firm which formerly employed him.
The United States and Special Agent James W. Cinelli, Jr., (government) have issued an Internal Revenue Service (IRS) summons pursuant to 26 U.S.C. § 7602 directing Manchel, Lundy and Lessin, a law partnership which employed Louis Kurland, Esquire, from 1973 to 1975, to produce its business records as they pertain to his employment. Mr. Kurland instructed Manchel, Lundy and Lessin not to comply with the IRS summons since he planned to intervene and present objections to the court. The government then brought summons enforcement proceedings under the authority of 26 U.S.C. §§ 7402(b) and 7604(a). In support of his motion to intervene, Mr. Kurland contends that Manchel, Lundy and Lessin were third-party record keepers as defined in 26 U.S.C. § 7609, that he has an interest in the proceedings under Fed. R. Civ. P. 24(a) and (b), and that intervention should be permitted because there has been an abuse of process. After consideration of briefs and arguments of counsel, this motion must be denied for the reasons explained herein.
Third-Party Record Keeper Contention under the Internal Revenue Code
Under Section 7609 of the Internal Revenue Code, effective February 28, 1977, when a summons is served on a "third party recordkeeper", the person named in the summons as to whom records are sought must be given notice of the summons [ § 7609(a)] and of a right to intervene [ § 7609(b)(1)]. A third party recordkeeper is defined as:
(B) any consumer reporting agency (as defined under Section 603(d) of the Fair Credit Reporting Act (15 U.S.C. 1681a(f)));
(C) any person extending credit through the use of credit cards or similar devices;
(D) any broker (as defined in section 3(a)(4) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(4)));
(F) any accountant. (emphasis added)
Since Manchel, Lundy and Lessin is a firm of attorneys, the taxpayer attempts to characterize his relationship with it as being within the third party record-keeper definition.
Although a law partnership may seemingly be covered by one of the labels in section 7609(a)(3), a third party recordkeeper must also "be a person engaged in making or keeping the records involving transactions of other persons. For example, an administrative summons served on a partnership, with respect to the records of the partnership's own transactions, would not be subject to these rules [ § 7609]." S. Rep. No. 94-938, 94th Cong. 2d Session 369. See H.R. Rep. 94-658, 94th Cong. 2d Session reprinted in  U.S. Code & Ad. News 2897, 3203, 3798. In light of this legislative history, courts differentiate between those records which are maintained by a business for its own purposes, even though they relate incidentally to a taxpayer, and those records which are maintained by the business for the taxpayer's purposes. When the records are kept for the taxpayer, the business is a third party recordkeeper and the taxpayer is entitled to notice and intervention in the proceedings. On the other hand, when the records only relate incidentally to the taxpayer and are really kept for the purposes of the business, no third party recordkeeper relationship exists and a taxpayer has no rights that would arise from such a relationship. United States v. Exxon ...