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Legal Sparring Continues in Bitcoin User's Battle with IRS Tax Sweep (fortune.com)

Posted by msmash on from the twisted-cases dept.

In a strange twist, Coindesk reports that the IRS has, somewhat indirectly, removed one target from its broad request for data about U.S. users of the Bitcoin exchange Coinbase. It no longer wants data about Jeffrey Berns, a lawyer who also happens to be fighting the IRS's "John Doe" request in court. From a report on Fortune: Berns originally filed a motion on December 13th asking the U.S. District Court for Northern California to stop the IRS' subpoena of Coinbase records. The IRS believes that its request, filed in November, is justified because Bitcoin owners "may fail, or may have failed, to comply with one or more provisions of the internal revenue laws." Berns is represented by his own law firm, Berns Weiss, whose motion argues that the IRS data search is "an abuse of process" and "overbroad." Berns has said his motion is intended to defend not only himself, but all targeted users. But according to a December 28th court filing by the IRS, Berns is no longer a target of its records request because he identified himself in his own filing, and the request is only for unidentified users. Therefore, the IRS argues, Berns is not a party to proceedings and his request to block the data grab should be thrown out of court. In response, Berns Weiss had its own spin, telling Coindesk that "The IRS's willingness to withdraw the summons as to Mr. Berns only because it is now aware of his identity," and without the additional information they're seeking about many other Coinbase users, "Makes it clear that the IRS does not have a legitimate purpose in seeking substantial personal and financial information concerning approximately 3 million Americans."

14 of 101 comments (clear)

  1. In Short by Anonymous Coward · · Score: 3, Informative

    In U.S. law, only someone who is involved in the conflict may ask the courts to resolve the matter in a particular way. The IRS then essentially removed this lawyer from the conflict; because the lawyer no longer meets the requirements for participating in the matter, the IRS is asking his petition to the courts to be rejected.

    Slick. And Stupid.

    1. Re:In Short by HiThereImBob · · Score: 3, Informative

      In U.S. law, "no warrants shall issue, but upon probable cause, supported by oath or affirmation, and ...

      In U.S. law, early amendments to the constitution can be overridden by later amendments. The 16th Amendment authorizes the federal government to collect income tax, and there is no way to do that without sticking its nose into every nook and cranny of everyone's financial affairs.

      You may still have your 4th amendment rights in other areas, but not for anything to do with money. 99% of the people are okay with that. If you are not, then you can join the 1% that vote Libertarian. Good luck.

      The 16th amendment simply provides for basic authorization of tax collection. The implementation is a long list of laws passed by congress collectively referred to as the tax code (including the law that creates the IRS itself). These laws, just like any other, must comply with all the other amendments - 4th included.

    2. Re:In Short by sir-gold · · Score: 5, Interesting

      But those John Does would have to prove legal standing (by proving they were specifically targeted), and by identifying themselves, would then lose the legal standing they had gained, same as what happened to the lawyer.

      The government has been very careful to make sure nobody can use the legal system against them. They have set up a catch-22 situation where establishing standing causes a loss of standing, so that literally nobody has the right to sue.

    3. Re:In Short by organgtool · · Score: 2

      So then they should DDOS the legal system by having all BitCoin holders affected by the behavior of the IRS file individual suits against the government.

    4. Re:In Short by shaitand · · Score: 2

      If the IRS public position is that the request only covers unidentified individuals does that mean anyone can send certified mail to the IRS indicating they used coinbase and be excluded from the request without anything further being sent to the IRS?

  2. Sounds fair... by Anonymous Coward · · Score: 5, Insightful

    So the IRS's argument is that, as soon as someone identifies themselves by suing them to prevent this release of data, they'll remove that person from the data grab request so they no longer have standing to sue them, and get the case thrown out?

    Hey America, there's this concept called 'justice'. You knew about it, once.

    1. Re:Sounds fair... by mysidia · · Score: 5, Insightful

      they'll remove that person from the data grab request so they no longer have standing to sue them, and get the case thrown out?

      When it comes to a violation of personal liberty, privacy, and constitutional rights protecting individuals, the concept of "Standing" is bogus and needs to be eliminated. Every American is damaged if personal liberties and privacy are infringed upon by the government.

  3. New depths of crazy. by Anonymous Coward · · Score: 5, Insightful

    "may fail, or may have failed, to comply with one or more provisions of the internal revenue laws."

    Excuse me!? First off swap that out with any other situation such as "we need a search warrant to search all of the apartments in a building because one of them may have, or may soon commit a crime" and any judge in the US with their head screwed on straight would laugh it out of court. Secondly even the IRS has I believe admitted that the tax code is so insanely convoluted that not even they can truly define the legal bounds of the tax code. So not only are they asking for sweeping ability to search personal records but they can't even define what laws those people may or may not have run afoul of.

  4. AND NO WARRANTS SHALL ISSUE... by Anonymous Coward · · Score: 2, Informative

    And no warrants shall issue except upon PROBABLE CAUSE.

    When your government has routinely violated the very Constitution under which it is supposed to operate,
    and has been doing so for at least the last 15 years completely with rampant disrespect and wanton abandon,
    and refusal to listen and correct its ways,
    it is time for you to overthrow that government.

  5. Get back to important stuff: SCO vs IBM by jfdavis668 · · Score: 2

    Enough arguing over bitcoins on /. We need more news about the SCO vs. IBM lawsuit. The future of Linux is in the balance!

  6. Re:Easy... by St.Creed · · Score: 4, Insightful

    Did you use any infrastructure at all to make money? Like roads? Bridges? Encounter any traffic lights? Did you have workers that needed food? Hospitals? Did your valuable income need protection from someone? Did you have business disputes that you want a judge to reside over? And do you think judges are items you can just buy? Did you want a building for your office that didn't come down in the first week, because inspectors made sure it adhered to the building codes? Did you like the wiring in the building? Did you feel safer, knowing there was a fire brigade in the beighbourhood? And that if you fell ill there was an ambulance nearby? Did you like the fact your employees got an education? Or yourself?

    Let's make a deal: you stop paying taxes, and you also stop using anything that was paid for by taxes. I'm fine with that. Have fun in your cave.

    --
    Therefore, by the (faulty) logic you're using, you're just a cow with a keyboard - osu-neko (2604)
  7. Re:Easy... by Frosty+Piss · · Score: 3, Insightful

    [sarcasm]

    Let's make a deal: you stop paying taxes, and you also stop using anything that was paid for by taxes. I'm fine with that. Have fun in your cave.

    Donald Trump doesn't pay taxes, why should I?
    [/sarcasm]

    --
    If you want news from today, you have to come back tomorrow.
  8. Re:Roe vs Wade by hackwrench · · Score: 3, Interesting

    The IRS is trying the same legal tactic Wade tried in Roe vs Wade, when it said that Roe was no longer a party because she had given birth and was no longer pregnant to be a candidate to have an abortion. The Supreme Court disagreed.

  9. Re:Interpretations by hackwrench · · Score: 2

    Courts do revisit their interpretations and come up with new interpretations. Your absolutism is invalid.