Donaldson v. United States

In furtherance of an investigation of petitioner's tax returns, respondent Grady, an Internal Revenue Service (IRS) Special Agent, issued summonses to petitioner's putative former employer (Acme) and its accountant for the production of Acme's records of petitioner's employment and compensation during the years under investigation. The summonses were issued under § 7602 of the Internal Revenue Code of 1954, which authorizes IRS examinations of records and witnesses for the purpose of determining tax liability. Thereafter respondents, pursuant to 26 U.S.C. §§ 7402 (b) and 7604 (a), filed in the District Court petitions for enforcement of the summonses. Petitioner filed motions to intervene in the enforcement proceeding, relying on Fed. Rule Civ. Proc. 24 (a)(2), which, inter alia, provides for intervention in an action "when the applicant claims an interest relating to the property or transaction which is the subject of the action..." Petitioner alleged that the IRS agents were investigating him solely to obtain evidence concerning criminal violations of the tax laws and that consequently the summonses were not issued for any purpose within the scope of § 7602 and could not be enforced. The court denied petitioner's motions and ordered that the records be produced. The Court of Appeals affirmed.

Held:


 * 1. Petitioner has no proprietary interest in the Acme records (his sole interest therein being that they presumably contain details of payments to him), and since he has no other protectable interest by way of privilege or otherwise, he has no absolute right under Fed. Rule Civ. Prov. 24 (a)(2) intervene in the IRS summons enforcement proceeding. Pp. 527-531.


 * 2. Under § 7602 an IRS summons may be used in connection with a tax investigation if (as in this case) it is issued in good faith and prior to a recommendation for prosecution. Pp. 531-536.

418 F. 2d 1213, affirmed.

BLACKMUN, J., delivered the opinion of the Court, in which BURGER, C.J., and BLACK, HARLAN, STEWART, WHITE, and MARSHALL, JJ., joined. DOUGLAS, J., filed a concurring opinion, post, p. 536. BRENNAN, J., filed a statement concurring in the result, post, p. 536.

Robert E. Meldman argued the cause for petitioner. With him on the briefs was Louis L. Meldman.

Lawrence G. Wallace argued the cause for the United States et al. On the brief were Solicitor General Griswold, Assistant Attorney General Walters, Deputy Solicitor General Springer, Samuel Huntington, Joseph M. Howard, and John P. Burke.