- Coin Center has won the right to sue the IRS and US Treasury over an “unconstitutional” tax code amendment affecting crypto transactions
- The group has successfully appealed after its initial lawsuit was blocked by a judge in Kentucky
- The amendment to section 6050I would require crypto users to disclose personal information for transactions over a certain value
Crypto advocacy group Coin Center has won the right to sue the Internal Revenue Service (IRS) and the US Treasury over an “unconstitutional” amendment to the tax code that would require Americans to disclose the details of certain crypto transactions to the tax agency. Coin Center won an appeal after its initial attempt was blocked by a judge in the Eastern District of Kentucky. The amendment to section 6050I of the US code would see crypto users handling assets over a certain value to share personal information.
Coin Center Lost Case in 2022
Coin Center’s attempt was blocked in July 2022 when US District Court Judge Karen Caldwell of the Eastern District of Kentucky, who had dismissed the case due to issues of subject matter jurisdiction, arguing that Coin Center had not satisfactorily argued that real harm had occurred, only that it could hypothetically happen in the future.
The changes to section 6050I were introduced as part of the $1.2 trillion Infrastructure Investments and Jobs Act of 2021. The amendment mandates that individuals and businesses involved in cryptocurrency transactions exceeding $10,000 must collect and report detailed personal information—such as real names, Social Security numbers, and home addresses—to both the parties involved and the government.
This requirement sparked significant backlash within the cryptocurrency community, with critics arguing that the change violates the principles of privacy and pseudonymity that are fundamental to the ethos of cryptocurrency.
“Overbearing Surveillance”
Coin Center filed a lawsuit in June 2022 against the US Treasury Department and the IRS, claiming that the law constitutes “overbearing surveillance” and infringes upon constitutional rights, including the First Amendment right to free expression and associational privacy.
In her ruling, Judge Moore agreed that some of Coin Center’s privacy concerns were not yet ripe for judicial review, stating, “We cannot invalidate 6050I based on scenarios that may never come to pass.” However, she identified three claims related to the Fourth Amendment, the First Amendment, and Congress’s enumerated powers that were sufficiently ripe to proceed in court.
Moore emphasized that the enumerated-powers claim was immediately ripe, noting that “either Congress exceeded the powers given to it by the Constitution or it did not.” As a result of this partial reversal, the case has been remanded to a lower court for further proceedings consistent with Moore’s opinion.
This development sets the stage for continued legal scrutiny of the amendment, potentially shaping the future of cryptocurrency regulation and privacy rights in the United States.
