The First Circuit U.S. Court of Appeals just issued a ruling that taxpayers will be able to take the IRS to court for violating their rights with data collection.
The court ruled that the U.S. District Court for the District of New Hampshire was wrong to dismiss the court challenge based on an alleged lack of jurisdiction.
Until now, the IRS has prevented federal courts from allowing any significant challenge to the IRS’ data-collection practices.
A three-judge panel of the U.S. Court of Appeals for the First Circuit has unanimously ruled in Harper v. Rettig that taxpayer James Harper can take the Internal Revenue Service (IRS) to federal court for gathering private financial information about his use of virtual currency from third-party exchanges without a lawful subpoena.
IRS has, until now, successfully prevented federal courts from asserting jurisdiction over a significant constitutional challenge to the agency’s unlawful data-collection practices. The First Circuit ruled that the U.S. District Court for the District of New Hampshire erred in its March 2021 decision granting IRS’s motion to dismiss Mr. Harper’s Fourth and Fifth Amendment challenge based on an alleged lack of jurisdiction. The district court did not have the benefit of the Supreme Court’s May 2021 decision in CIC Services, LLC v. IRS, which concluded that the Anti-Injunction Act (AIA) does not prohibit a suit “seeking to set aside an information-reporting requirement that is backed by both civil tax penalties and criminal penalties.” Mr. Harper’s suit, which seeks to set aside IRS’s illegal information gathering, is likewise not a suit brought to enjoin a tax’s assessment or collection, so it is not subject to the AIA’s limits on court jurisdiction.
It might take you a hundred years, but you can try.