The Internal Revenue Service will likely not be penalized for obtaining records on a crypto user from Coinbase or Abra.
A federal judge has implied that an individual may not have the right to force the Internal Revenue Service, or IRS, to expunge financial records it obtains from crypto exchanges.In granting a motion to dismiss filed in December, Judge Joseph DiClerico in the District of New Hampshire suggested the Internal Revenue Service has no obligation to honor requests to purge crypto transaction records it received from Coinbase or other exchanges regarding information for federal taxes. Dismissed in part for lack of jurisdiction, the civil rights case filed by plaintiff James Harper against IRS commissioner Charles Rettig, the agency, and its officers concluded after almost a year in court. Today’s dismissal said that Harper was not entitled to compensation for damages, or to limit the IRS’ ability to obtain tax information from the exchanges, mainly due to the Anti-Injunction Act. Only applicable to federal taxes, the statute prevents federal courts from exercising jurisdiction in certain cases to hinder “the assessment or collection of any tax.””The effect of Harper’s requested declaratory and injunctive relief would be to prevent the IRS from assessing Harper’s or others’ taxes using the information it has obtained through the John Doe third-party process,” said Judge DiClerico. “Consequently, his suit, to the extent it seeks injunctive and declaratory relief, is barred by the Anti-Injunction Act.”Harper had an account at Coinbase starting in 2013, first receiving Bitcoin ( …
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