Supreme Court Declines Coinbase Privacy Case IRS Wins Access to User Data

The U.S. Supreme Court has declined to take up a long-running privacy case involving an Internal Revenue Service (IRS) request for data on thousands of Coinbase customers. The decision means that a lower court’s ruling in favor of the IRS is now legally binding. The case centered around James Harper, a Coinbase customer who argued that the IRS’s data request violated his Fourth Amendment rights, which protect Americans from unreasonable searches and seizures by the government.

Harper initially filed his lawsuit in 2020, following letters from the IRS warning him and other Coinbase customers about potential tax violations related to cryptocurrency transactions. He claimed that the IRS’s “John Doe summons,” which forces financial institutions to provide records to identify potential tax violators, was unconstitutional. Harper’s lawyers argued that the IRS had acquired the power to demand access to private information without judicial process, even when individuals had contracts with third parties promising to protect their private information.

A New Hampshire district court dismissed Harper’s suit in 2021, siding with the IRS. Harper appealed, and in 2023, another New Hampshire district court judge again ruled in favor of the IRS. The judge stated that the IRS’s actions fell within the broad latitude granted by Congress and that Harper was not entitled to additional protections beyond existing safeguards. Harper appealed once more, and in 2024, a U.S. appeals court affirmed the lower court’s decision, leading Harper to file a petition for a writ of certiorari with the Supreme Court in February.

Despite support from various think tanks and companies, including Coinbase and X, the Supreme Court denied Harper’s petition without providing further explanation. The denial means that the lower court’s decision stands, and the IRS’s request for Coinbase user data is legally valid. The Supreme Court’s refusal to hear the case leaves the third-party doctrine intact, which allows government agencies to access information shared with third parties without a warrant or probable cause.