• A federal court ruled that the IRS has the legal authority to access Coinbase users’ trading data via a “John Doe” summons.
• The suit was filed by James Harper against the IRS in 2020 and argued that it was a violation of his Fourth and Fifth Amendment rights.
• The U.S. District Court of New Hampshire said that the powers afforded to the IRS by Congress allow it to access any information knowingly shared with a third party, thus Harper is not entitled to any protections as he did not have “a reasonable expectation of privacy in Coinbase’s records of his account.”
Legal Authority for Accessing Coinbase Users‘ Trading Data
A federal court recently ruled that the Internal Revenue Service (IRS) has the legal authority to access Coinbase users‘ trading data via a „John Doe“ summons, according to court filings. This ruling came from a case filed by James Harper against the IRS in 2020 and sought to block tax authority’s access, arguing that it was a violation of his Fourth and Fifth Amendment rights.
Court Ruling on Constitutional Rights
The U.S. District Court of New Hampshire said that the powers afforded to the IRS by Congress allow it to access any information knowingly shared with a third party, thus Harper is not entitled to any protections as he did not have “a reasonable expectation of privacy in Coinbase’s records of his account.“ The court further stated that trading records at Coinbase are akin to financial records at a bank and cannot be protected under constitutional rights.
Congressional Powers Allowing IRS Access
The ruling made clear that due to congressional powers, the IRS can gain access into taxpayer accounts without violating their constitutional rights as long as certain standards are met before issuing summonses for such requests. In this case, those standards were satisfied before issuing such summonses which allowed them legal influence into user accounts on cryptocurrency exchanges like Coinbase.
Reasonable Expectation of Privacy Rejected
The court rejected Harper’s argument about expecting privacy when sharing data with third parties because they claimed there is no reasonable expectation for such data being kept private from government authorities if requested appropriately through governmental channels like an IRS summons or subpoena.
Conclusion
In conclusion, this ruling has made clear how much power governmental authorities such as the IRS can wield over taxpayers when given appropriate authorization from Congress and other related organizations regarding taxpayer information stored on cryptocurrency exchanges and other similar platforms where digital assets are traded online
