Privacy rights
Harper v. Internal Revenue Service
Date: June 30, 2025
Issue: Does the Fourth Amendment permit warrantless searches of customer records held by third-party service providers if the customer contractually owns the records, or if those records enable surveillance of future behavior?
Case Summary: The U.S. Supreme Court refused to hear a lawsuit challenging the IRS’s authority to issue a summons for a cryptocurrency investor’s records to a third-party financial institution.
In 2013, James Harper opened an account with Coinbase, which promised to protect his financial privacy. However, in 2016, the IRS obtained a John Doe summons to collect records from millions of Coinbase users. This type of summons is used when the IRS does not know the identities of taxpayers under investigation. In 2019, the IRS contacted Harper, indicating it believed he may have unreported virtual currency accounts.
In 2020, Harper sued the IRS in New Hampshire federal court, alleging it violated his Fourth and Fifth Amendment rights. He also requested that the court order the IRS to return or destroy the records it had obtained from Coinbase related to his account.
The district court dismissed the case, ruling that the Anti-Injunction Act (AIA) barred jurisdiction. Harper appealed, and the First Circuit reversed and remanded. On remand, however, the district court again dismissed the case, finding that Harper had no Fourth Amendment interest in the Coinbase records. The court also rejected Harper’s Fifth Amendment due process claim, concluding he had neither a property interest in his financial data nor a protectable liberty interest in its privacy.
On appeal, a First Circuit panel affirmed. On the Fourth Amendment, Harper argued he had a reasonable expectation of privacy concerning his Coinbase account data. However, the panel noted that the U.S. Supreme Court has consistently held that individuals do not have a legitimate expectation of privacy in information they voluntarily provide to third parties. On the Fifth Amendment, Harper argued the IRS used a summons to obtain his Coinbase records without notifying him or offering a chance to respond. But the panel pointed out the IRS did not deprive him of a protected property or liberty interest because he voluntarily shared the information with Coinbase and lacked a reasonable expectation of privacy.
On Feb. 21, 2025, Harper filed a certiorari petition urging the Supreme Court to revisit the third-party doctrine and restore Fourth Amendment protections to digital records that Americans routinely store with service providers. Harper argued his case offered a strong opportunity to reform the doctrine for the digital age. However, the Supreme Court declined to hear the case without offering any explanation.
Bottom Line: The First Circuit affirmed the decision, and the U.S. Supreme Court declined to review the case, allowing the IRS to issue the summons to a third party.
Documents: Circuit court opinion
