Key Takeaways
- The US District Court in New Hampshire ruled in favor of the IRS, ruling that John Doe Summons did not violate US constitutional rights.
- The ruling claims that private citizens are not allowed to sue the IRS for suspected tax violations.
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A The US Federal court has confirmed that the Internal Revenue Service (IRS) holds the authority to request user data from Coinbase, a leading cryptocurrency exchange. The ruling rejected constitutional objections raised by James Harper, an early cryptocurrency trader, ACCORDING in the official case file.
Harper’s lawsuit against the IRS, its former commissioner Charles Rettig and ten agents alleges rights violations through a “John Doe” call. A John Doe subpoena is when the IRS requests – or requests – information about an unknown taxpayer, usually someone who holds funds in an offshore bank account, ACCORDING to the IRS.
Mention the 2021 Supreme Court ruling in CIC Services LLC v. IRS, the US District Court in New Hampshire ruled that the power of the IRS, granted by Congress, means that Harper has no additional protection or relief. Harper previously argued that this request violated his Fourth and Fifth Amendment rights, according to the case file. The court document further confirms this, saying:
“With respect to Harper’s statutory claim, the statute at issue does not expressly or impliedly grant taxpayers a private right to sue the IRS for alleged violations of the statute.”
Despite resistance from Harper, Coinbase reportedly had to release the data of its top users in response to a call against the exchange. The IRS took action against Harper’s failure to declare his crypto trades in 2013 and 2014.
On September 22, 2022, US District Judge Paul G. Gardephe authorized the IRS to issue John Doe summons to MY Safra Bank in an effort to identify US taxpayers who may have failed to fully report their cryptocurrency transactions.
This John Doe summons specifically targets customers of cryptocurrency prime broker, SFOX, who avail themselves of the services of MY Safra Bank for their digital currency dealings.
“The John Doe summons ordered MY Safra to produce records that would enable the IRS to identify US taxpayers who were customers of SFOX and who engaged in cryptocurrency transactions that may not have been properly reported on tax returns. .”
Deputy Assistant Attorney General David A. Hubbert stated in response, “taxpayers who engage in cryptocurrency transactions should understand that income and gains from cryptocurrency transactions are taxable. The information sought in the subpoenas is approved today will help ensure that cryptocurrency owners comply with tax laws.
