Emerging Cryptocurrencies and IRS Summons Power: Striking the Proper Balance between IRS Audit Authority and Taxpayer Privacy

Abstract

ABSTRACT To protect the privacy and other civil liberties of citizens, federal courts place limits on the power and actions of government. These limits create a need for balance between the IRS' mission of tax law enforcement and taxpayers' privacy rights. A much-watched contemporary lower court case intersecting cryptocurrencies, summons power, and taxpayer privacy is Coinbase v. U.S. There, the IRS sought to summons massive amounts of customer information from Coinbase, a cryptocurrency exchange platform. This article examines the history of the IRS summons power and argues that the Coinbase court correctly extended a wealth of summons enforcement case law by weighing the protection of taxpayer privacy with the tax compliance mission of the IRS. By allowing the IRS summons to stand, but limiting and defining the scope of relevant records allowed to be examined, the Coinbase court correctly balanced IRS tax enforcement with taxpayer data privacy.