Crypto think tank Coin Center got the go-ahead from a U.S. court of appeals to re-try its lawsuit against the Treasury Department and the IRS.
Coin Center sued them in 2022 over a controversial amendment to the U.S. tax code that would require people to disclose certain crypto transactions – and personal details of the participants in those transactions – to the IRS.
The think tank has argued that the amendment is unconstitutional and is evidence of “overbearing surveillance” of crypto users.
Crypto think tank Coin Center will get another shot at suing the U.S. Treasury Department over what it says is an “unconstitutional” amendment to the tax code that would require Americans to disclose the details of certain crypto transactions to the Internal Revenue Service (IRS).
On Aug. 9, Circuit Judge Karen Nelson Moore of the U.S. Court of Appeals for the Sixth Circuit overturned an earlier decision by a U.S. District Court Judge – Judge Karen Caldwell of the Eastern District of Kentucky – to dismiss Coin Center’s lawsuit. Caldwell agreed to dismiss the case on issues of subject matter jurisdiction last July, ruling that her court did not have the authority to decide on the issues brought forth by Coin Center’s case because they were not yet “ripe” – a legal term meaning that a plaintiff has not satisfactorily argued that real harm has occurred, only that it could hypothetically happen in the future.
The amendment to section 6050I of the U.S. code, which was enshrined in the $1.2 trillion Infrastructure Investments and Jobs Act passed in 2021, would legally require crypto users exchanging digital assets worth more than $10,000 to collect and share personal information – including their real names, Social Security numbers and home addresses – with both each other and the authorities.
The amendment sparked a public outcry from many in the crypto industry, who saw the requirement as being antithetical to the ethos of crypto, where many users are pseudonymous, as well as a violation of their privacy and a potential government overreach.
Coin Center filed suit against the Treasury Department and the IRS in June 2022, arguing that the amendment represented “overbearing surveillance” that would infringe on numerous constitutional rights, including the First Amendment right to expression and associational privacy.
The Circuit Court’s Moore ruled that some of Coin Center’s privacy concerns were not yet ripe, writing “We cannot invalidate 6050I based on scenarios that may never come to pass. Nor do we have authority to opine generally on its constitutionality.”
But she found that Coin Center did, in fact, have three claims – on Fourth Amendment, First Amendment, and enumerated powers (essentially, a question about the government’s authority as granted by Congress) – that were “ripe” enough to try in court.
“Plaintiffs’ enumerated-powers claim is clearly ripe,” Moore wrote in her judgment. “The enumerated-powers claim presents an exceedingly simple, pure legal issue: either Congress exceeded the powers given to it by the Constitution or it did not … [I]t was ripe the moment Congress passed the law.”
Moore’s partial reversal of Caldwell’s ruling means that the suit has been remanded back down to a lower court for fresh proceedings “consistent with [her] opinion.”
Peter Van Valkenburgh, Coin Center’s director of research, celebrated the legal victory in a Monday blog post, writing:
“The privacy of those associations, the names and personal information of Americans who support our mission through donations is our constitutional right, and we’re excited to move forward defending that right on the merits.”
Neither the Treasury nor the IRS responded to CoinDesk’s request for comment.
