New Hampshire Man Sues IRS Over Crypto Data Collection

US Internal Revenue Service (IRS) has been sued by New Hampshire resident James Harper for collecting his private financial data from at least one cryptocurrency trading platform.

Harper is one of more than 10,000 crypto holders who received a letter from the IRS accusing them of misreporting their transactions.

According to a complaint filed earlier this month in the United States Court of Appeals for the First Circuit, the IRS took Mr. Harper’s data “without reasonable suspicion and without a court order,” thereby violating his constitutional rights protected by the Fourth and Fifth Amendment.

appeal follows a March 2021 decision by the United States District Court for the District of New Hampshire to dismiss a lawsuit against the IRS, in which Mr. Harper sought compensation and a court order requesting all tax agencies to erase the private financial data it had obtained. .

Data and privacy

Pointing to the contracts it has signed with cryptocurrency exchanges, Harper says that each of these companies has agreed to provide “strong privacy protections” to their financial records and “has provided them with a reasonable expectation of privacy in their personal information.”

You also claim that the contracts have recognized that your data is your property, making it clear that you have not voluntarily waived your Fourth Amendment rights when doing business with companies.

According to court documents, Mr. Harper had some accounts with Coinbase, Abra, and Sustain. Since Uphold confirmed that he did not provide the litigant’s private financial information to the IRS, therefore, he claims that the authorities likely obtained it from Abra or Coinbase, or both.

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Harper opened an account with Coinbase in 2013, and the California-based exchange provided the terms of the agreement stating that it would “take reasonable precautions… to protect [the account owner’s] personal information from loss, misuse, unauthorized access, disclosure, alteration and destruction ‘.

In 2013 and 2014, Harper deposited Bitcoin that he received as income from his consulting work to his Coinbase account. litigant claims to have reported both transactions on his 2013 and 2014 tax returns and all ‘appropriate Bitcoin income paid’, including capital gains tax.

Harper, who liquidated his holdings in the Coinbase account in 2015 and by 2016 no longer had any cryptocurrency with the exchange, also claims to have paid “appropriate capital gains on any Bitcoin income for fiscal years 2015 and 2016.”

In the period from 2016 to August 2020, Harper closed his accounts with Abra and Uphold.

Prior to the March 2021 district court ruling, in August 2019, Mr. Harper received a letter from the IRS, with the agency claiming that he did not “correctly report” his “transactions involving virtual currency.” In the next press release, the IRS urged taxpayers to “take these letters very seriously” and “correct past mistakes.”

Such allegations led Mr. Harper to conclude that the IRS violated its contracts with at least one of the exchanges. However, the district court ruled that the sovereign immunity of the United States government precludes such legal actions.

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“Earlier this year, the Supreme Court ruled that the IRS cannot block cases challenging the constitutionality of its behavior by hiding behind the Anti-Mandate Act,” said Caleb Kruckenberg, a new civil attorney for the Liberties Alliance representing the Mr. Harper. “Unfortunately, that decision was made after the district court allowed the IRS to abuse the law in that way.”

However, the attorney is confident that since the case, in Supreme Court terms, is a “game,” the First Circuit “should quickly restore this case.”

Furthermore, as stated in the original dress in July 2020, the “case presents an opportunity to correct the course of constitutional law” and prevent the IRS from seeking access to personal financial records “even when a person has entered into a contract with a third party promising to protect your private information from such intrusion.

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