James Harper did what a lot of crypto holders wished they could do. He got an IRS letter about his virtual currency, decided the IRS had obtained his Coinbase records unlawfully, and sued to make the agency return or destroy them.

He lost. The case is Harper v. Werfel, 118 F.4th 100 (1st Cir. 2024), and the Supreme Court declined to hear it on June 30, 2025. If you have been counting on privacy law to keep your exchange records away from the IRS, this is the case that ends that hope.

Why this case got any traction at all

It is worth saying why Harper is notable before saying why he lost. Most taxpayers who object to an IRS information request never get a court to hear the merits. Harper did, partly because he framed the case as a challenge to how the IRS acquired and kept his information, not as a fight over his tax bill. That framing got him past the Anti-Injunction Act in 2022.

Once the court reached the merits, though, the existing law on third-party records decided the case. The same Supreme Court precedents that govern bank records, including Miller and United States v. Powell, 379 U.S. 48 (1964), on summons enforcement, set the frame. Crypto did not get a new rule.

The facts

According to the First Circuit, Harper opened a Coinbase account in 2013 and deposited Bitcoin in 2013 and 2014, mostly received as income from consulting work. In 2015 he began liquidating his holdings or moving them to a hardware wallet, and by early 2016 he had no Bitcoin left in the Coinbase account. He alleged that he properly reported all of it; the appeal did not involve any challenge to that.

In 2019 he received an IRS letter saying the agency had information that he had or had one or more accounts containing virtual currency but may not have properly reported his transactions. That is the language of Letter 6174-A. See the Letter 6174-A guide.

Harper alleged the letter referred to information the IRS obtained through its 2016 John Doe summons to Coinbase, which a federal court in California had enforced in part in 2017. See what that court allowed.

The procedural path

The district court in New Hampshire first dismissed the case under the Anti-Injunction Act, IRC 7421(a), which bars suits to restrain the assessment or collection of tax. The First Circuit vacated that ruling in Harper v. Rettig, 46 F.4th 1 (1st Cir. 2022), holding that Harper’s claim about how the IRS acquired and kept his information did not relate to assessment or collection.

On remand, the district court dismissed again, this time for failure to state a claim, in a decision the First Circuit cites as 675 F. Supp. 3d 190 (D.N.H. 2023). Harper appealed again. That second appeal produced the 2024 opinion.

The Fourth Amendment holding

Harper argued two theories: that he had a reasonable expectation of privacy in his Coinbase account information, and that the records were his property, held by Coinbase like a bailment.

The court rejected the privacy theory under the third-party doctrine. It relied on United States v. Miller, 425 U.S. 435 (1976), in which the Supreme Court held that a depositor has no legitimate expectation of privacy in bank records, because they contain information voluntarily conveyed to the bank. The First Circuit agreed with the IRS and the district court that the same reasoning applied to Harper’s Coinbase records, and it added that Coinbase’s terms of service expressly warned accountholders of possible disclosure to law enforcement.

Harper invoked criticism of the third-party doctrine by academics and individual Justices, including Justice Gorsuch’s dissent in Carpenter v. United States. The First Circuit answered that it is bound to apply Supreme Court precedent as it stands. It also rejected the property theory, finding that the records were Coinbase’s business records, not Harper’s private papers.

The Fifth Amendment and statutory holdings

Because Harper lacked a protectable privacy or property interest in the records, the court held he had no Fifth Amendment due process claim either. In the court’s words, it affirmed on the ground that Harper “lacks a protectable interest under the Fourth or Fifth Amendment.”

Harper also argued, under the Administrative Procedure Act, that the summons never satisfied the requirements of IRC 7609(f). The First Circuit affirmed dismissal of that claim because he had not challenged a final agency action, as an APA claim requires.

The Supreme Court said no

Harper petitioned for certiorari in No. 24-922, Harper v. Faulkender. The Supreme Court’s order list for June 30, 2025 shows the petition was denied. A denial of certiorari is not a ruling on the merits. But it leaves the First Circuit’s decision in place.

What Harper means for you

Four practical takeaways.

  • Records held by an exchange are the exchange’s business records. Under the First Circuit’s reasoning, you cannot block the IRS from obtaining them on Fourth Amendment grounds.
  • You will not get notice of a John Doe summons. IRC 7609(c)(3) removes the notice requirement for summonses described in 7609(f). See how the John Doe process works.
  • After-the-fact lawsuits are uphill. The Anti-Injunction Act issue was resolved in Harper’s favor, but the constitutional and APA claims failed.
  • The defense is in your return, not the records. Harper alleged he reported everything correctly. If that is true for you, the IRS having your records is an inconvenience, not a crisis.

What Harper does not decide

The case is about records in a third party’s hands. It does not address what you personally must produce if the IRS summons you directly, which raises different questions, including privilege questions a lawyer should evaluate before you respond. See IRS summonses for your own wallet records.

It also does not decide anything about self-custody. A hardware wallet’s private keys are not an exchange business record. On-chain activity, though, is public by design, and the IRS fraud handbook notes that IRS personnel can get internal help with blockchain analysis and digital asset tracing. See IRM 25.1.2.11.

Questions clients ask after reading Harper

“Should I close my exchange account?” Closing an account does not erase records an exchange already has, and exchanges generally keep records after an account closes. It also does nothing about information returns already filed. Close it if you want to, but not as a tax strategy.

“Should I move everything to self-custody?” That is an investment and security question, not a tax defense. Moving crypto off an exchange is not a taxable sale, but it also does not hide prior activity. And the IRS fraud handbook lists the use of un-hosted wallets “in order to avoid reporting requirements” as an indicator of fraud. See IRM 25.1.2.11.1. Motive matters.

“Can I sue if the IRS used my records?” You can file anything. Harper shows how hard it is to win when the records came from a third party under a court-authorized summons.

“Does the government have to delete the records eventually?” Harper asked for exactly that remedy, return or destruction, and did not get it. The opinion does not create any right to have summoned exchange records purged from IRS files.

“If I reported correctly, should I worry?” No. Keep your returns and supporting records together. If the IRS asks, you answer with documents, and the conversation ends there.

The bottom line

Privacy arguments are not going to keep your exchange history away from the IRS. Accurate returns will make that history boring.

If you are not sure yours are accurate, the time to find out is before the IRS compares them for you.