August 10, 2020
By Kileen Lindgren
Imagine receiving a letter from the IRS saying it has obtained your confidential financial information from a third party, because you could have failed to report this information properly. Not that it did happen, or there was evidence of withheld information, but that you could have done something wrong. This happened to James Harper, a law-abiding citizen whose only crime was trading and owning bitcoin, and 10,000 other individuals engaged in bitcoin exchange. The IRS seized Harper’s private financial information simply for engaging in legal currency exchange and without direct suspicion that he had violated any law. Harper is represented by our friends at the New Civil Liberties Alliance, with assistance from attorney Jared Bedrick—a member of the Goldwater Institute’s American Freedom Network.
The Fourth Amendment to the U.S. Constitution protects individuals against “unreasonable searches and seizures,” and the Fifth Amendment guarantees due process. The IRS violated both rights by intimidating third parties into divulging information they agreed to keep confidential and by failing to inform Harper ahead of time and provide him an opportunity to challenge the seizure of his private records. This case has the potential to impact constitutional privacy law for the better, and we are glad that the American Freedom Network can play a part in defending these important rights.
“The advent of cryptocurrency and related exchanges created legal gray areas, which the federal government wants to claim. This case challenges a particularly esoteric mechanism that the IRS has been using to invade a fundamental privacy interest—keeping the government’s eyes off your financial information,” said Bedrick. “When organizations like the Goldwater Institute and its partners ask for assistance keeping government in check, attorneys ought to show up to help, and I am honored to do so.”
The American Freedom Network is the Goldwater Institute’s national network of volunteer attorneys, in all 50 states, who defend Americans’ constitutional rights. “Network attorneys are providing critical assistance to individuals around the country, like James, who have been denied constitutionally-guaranteed recourse and wouldn’t otherwise be able to fight back,” said Goldwater Institute Director of National Litigation Jon Riches. “This work is more important than ever, right now.”
If you are an attorney interested in participating in the American Freedom Network, you can find more information here. If you’re a citizen who needs help defending your rights, you can find more information here.
Kileen Lindgren is the Legal Programs Manager at the Goldwater Institute.