The opinion of the court was delivered by: DOOLING
Earlier than March 31, 1977, the taxpayers were under investigation by the grand jury with respect to their income tax returns for years before the taxable year 1976. The grand jury investigation had been a continuing one and in connection with it the United States Attorney under date of March 1, 1978, issued a subpoena duces tecum to J. K. Lasser & Company, requiring the firm to produce before the grand jury "any and all work papers prepared by you or under your supervision or prepared by any member of your firm in connection with the preparation of Ira and Charlotte Duchan's 1976 Joint Federal Income Tax Return, including but not limited to the retained copies and schedules of the 1976 Tax Return . . .."
The taxpayers had consulted counsel before their 1976 United States and New York State Income Tax Returns were due to be filed. While the affidavit submitted in support of the taxpayers' motion to quash the grand jury subpoena does not explicitly so state, it was stated at oral argument, and appears evident, that the taxpayers consulted counsel not only with respect to the ongoing grand jury investigation of their tax returns for earlier years but also in connection with the steps to be taken in connection with filing the 1976 return. Although again the affidavit in support of the motion does not so state, it was said at oral argument, and is fairly apparent, that counsel concluded that it was important that any tax return filed for the year 1976 not contain any statements that might be used in evidence against the taxpayers in connection with the investigation of their tax affairs for earlier years. It was concluded, however, in the light of United States v. Sullivan, 1927, 274 U.S. 259, 263-264, 47 S. Ct. 607, 71 L. Ed. 1037, and Garner v. United States, 1976, 424 U.S. 648, 664, 96 S. Ct. 1178, 47 L. Ed. 2d 370, that the return to be filed should not contain anything beyond the first page, and should not contain any self-accusatory statements or any disclosures that could be used in evidence against the taxpayers in connection with their returns of the previous years. Again, the affidavit in support of the motion does not spell out these facts; however, it is readily inferable that, as stated at the oral argument by the taxpayers' counsel, he concluded that his course involved three steps: first, to have his clients comply with the mandate of Garner and Sullivan, and at the same time avoid self-incrimination by not filling out those parts of the tax return which might supply incriminating admissions or might lead to the discovery of evidence that could be used to show that they had evaded tax in earlier years; second, it seemed to counsel imperative that the maximum possible extension of time to file the tax return should be obtained (and, accordingly, by apparently appropriate steps, an extension of time to mid-October was obtained, 90% of the estimated tax being paid with the filing of the application for an extension of time); and third, that an accountant should be retained "to prepare the Federal, State and City Income Tax Returns for Charlotte and Ira Duchan."
Presumably after some advance contact, the taxpayers' counsel wrote Leon Hariton, a certified public accountant then associated with J. K. Lasser & Co., saying that, "Pursuant to my discussion with Ira Duchan, this letter is to confirm your retention to gather information for the preparation of the 1976 Tax Returns for Ira and Charlotte Duchan. It is understood that you are being retained by me and will work under my direction."
The accountant prepared 1976 Federal, State and City Tax Returns for the Duchans, billed the taxpayers' counsel for his services, and was paid by a check drawn by counsel on his account under date of July 13, 1977. The first pages of the two tax returns prepared by the accountant were signed by him as preparer without date and were signed by the taxpayers under date of October 12, 1977, and the Federal Tax Return was sent to the Internal Revenue Service Center on October 13, 1977, by counsel under a letter advising that the taxpayer Ira Duchan was currently the subject of an investigation into his Federal Income Taxes and that taxpayer Ira Duchan had the right to and did through counsel assert his Fifth Amendment privilege against self-incrimination and "therefore cannot at this time file complete individual income tax returns for the year 1976", but that he was submitting a photostatic copy of page one of a 1040 return for 1976 in compliance with the decisions in Sullivan and Garner. Later the Internal Revenue Service wrote asking for the filing of the remaining schedules or pages of a completed form of income tax return, and that was not done. Apparently thereafter the subpoena was issued by the grand jury for the papers in the possession of J. K. Lasser & Co.
Couch v. United States, 1973, 409 U.S. 322, 327, 93 S. Ct. 611, 615, 34 L. Ed. 2d 548, speaking of the privilege against self-incrimination, emphasized that
"By its very nature, the privilege is an intimate and personal one. It respects a private inner sanctum of individual feeling and thought and proscribes state intrusion to extract self-condemnation. Historically, the privilege sprang from an abhorrence of governmental assault against the single individual accused of crime and the temptation on the part of the State to resort to the expedient of compelling incriminating evidence from one's own mouth."
Couch dealt with enforcing a production summons to produce a taxpayer's records directed to the taxpayer's accountant, and the Court continued by saying (409 U.S. at 329, 93 S. Ct. at 616)
"In the case before us the ingredient of personal compulsion against an accused is lacking. The summons and the order of the District Court enforcing it are directed against the accountant. He, not the taxpayer, is the only one compelled to do anything. And the accountant makes no claim that he may tend to be incriminated by the production." (footnote numeral and footnote omitted.)
Rejecting the argument that the taxpayer's ownership of the records gave an entitlement to assert the privilege even though they were in the hands of the accountant, the Court did, however, point out that, while the Court indeed believed
". . . that actual possession of documents bears the most significant relationship to Fifth Amendment protections against governmental compulsions upon the individual accused of crime. Yet situations may well arise where constructive possession is so clear or the relinquishment of possession is so temporary and insignificant as to leave the personal compulsions upon the accused substantially intact. But this is not the case before us. Here there was no mere fleeting divestment of possession: the records had been given to this accountant regularly since 1955 and remained in his continuous possession until the summer of 1969 when the summons was issued." (409 U.S. at 333-34, 93 S. Ct. at 618, footnote numerals and footnotes omitted).
In concluding the Court said (409 U.S. at 336, 93 S. Ct. at 619)
"We hold today that no Fourth or Fifth Amendment claim can prevail where, as in this case, there exists no legitimate expectation of privacy and no semblance of governmental compulsion against the person of ...