IRS Wins: Court Upholds Seizure of Coinbase User Data

Overview

• A US Federal Court has ruled in favor of the Internal Revenue Service (IRS) to seize user data from Coinbase, a leading cryptocurrency exchange.
• The plaintiff, James Harper, had argued that the IRS’s request for his Coinbase trading records violated his rights under the Fourth and Fifth Amendments.
• The court ruling dismisses claims that the tax body’s action infringed constitutional rights.

Background

In August 2020, James Harper filed a legal challenge against the IRS and its then-commissioner Charles Rettig, plus ten other IRS agents. Harper asserted that the IRS was infringing upon his rights by obtaining trading records via a ‘John Doe’ summons. This is an established strategy used by government bodies to legally request third-party data belonging to individuals or groups for investigating potential cases of tax evasion.

Court Ruling

The US District Court of New Hampshire referenced a Supreme Court ruling from May when deciding on this case. The court stated that Congress had granted powers to the IRS which means Harper isn’t eligible for protection or relief beyond existing “checks on the IRS’ powers“. Although Harper argued his innocence, he failed in preventing Coinbase from surrendering some of its largest users‘ information including himself after they were issued with another summons in 2017.

Harper’s Appeal

Last year, Harper was granted permission by the First Circuit to sue the IRS over accusations of failing to declare his cryptocurrency trades adequately in 2013 and 2014. He had previously contested against the initial demand made by the IRS for Coinbase to provide all user trading records when he submitted an amicus brief back in 2016.

Conclusion

The US Federal Court has ruled in favor of granting authority to the Internal Revenue Service (IRS) to seize user data from Coinbase without infringing upon any constitutional rights held by individuals like James Harper who are accused of not declaring their crypto-trades correctly according to taxation laws set out by Congress.

Author: admin