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Harper v. Werfel

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CASE: James Harper v. Daniel Werfel, et al.

STATUS: Active

NCLA ROLE: Counsel

COURTS HEARD IN: D. NH, 1st Cir.

ORIGINAL COURT: U.S. District Court for the District of New Hampshire

DECIDING COURT: U.S. Court of Appeals for the First Circuit

OPENED: July 15, 2020

AGENCIES: Internal Revenue Service

FOCUS AREAS:

Due Process Violations

The due process of law guarantees a right to be held to account only through the processes of an impartial court—something administrative tribunals violate every day.

Unreasonable Searches

The Fourth Amendment forbids warrantless searches and seizures of information, yet the Administrative State violates this right to privacy through administrative subpoenas and warrants, automated information collection devices, civil investigative demands, and “voluntary” requests for information.

CASE SUMMARY

NCLA’s client James Harper bought his first bitcoin in 2013, diligently paying all applicable taxes and reporting his trades related to bitcoin holdings. Throughout these years, all his transactions were facilitated through three digital virtual currency exchanges: Coinbase, Abra, and Uphold. Given that all of them had contractually promised Mr. Harper to protect his private information, he was genuinely surprised when, on August 9, 2019, he received a letter from IRS informing him that the agency had obtained his financial records related to ownership of bitcoin without any particularized suspicion of wrongdoing. Mr. Harper is one of 10,000 virtual currency owners who received such a letter, according to the IRS website.

IRS somehow obtained Mr. Harper’s records without a valid subpoena, court order, or judicial warrant based on probable cause. In this case, IRS violated the Fourth Amendment by issuing an informal demand for Mr. Harper’s financial records from a third party even though it lacked any particularized suspicion that he had violated any law.

NCLA’s lawsuit says IRS violated the Fifth Amendment’s Due Process Clause by seizing Mr. Harper’s private financial information from the third-party virtual currency exchange(s) without first providing him with notice and an opportunity to challenge the seizure of his property. From the very beginning, IRS acted in violation of the statute of special procedures by third-party summonses by failing to notify Mr. Harper of the summons and making a gross, baseless, and arbitrary judgment that he might not comply with IRS tax obligations.

OUR CLIENT

James Harper, Plaintiff

OUR TEAM

Sheng Li
Litigation Counsel

RELEVANT MATERIALS

NCLA FILINGS

Plaintiff-Appellant’s Reply Brief

January 31, 2024 | Read More

Brief for the Appellees

December 21, 2023 | Read More

Plaintiff-Appellant’s Opening Brief

October 13, 2023 | Read More

Memorandum Order

May 26, 2023 | Read More

Defendants’ Reply in Support of Their Renewed Motion to Dismiss for Failure to State a Claim

February 28, 2023 | Read More

SEE 19 FILINGS
PRESS RELEASES

NCLA Returns to First Circuit Asking It to Confront IRS’s Illegal Confiscation of Cryptocurrency Data

February 1, 2024 | Read More

In NCLA Win Against IRS, First Circuit Rules Taxpayers Can Indeed Take the Agency to Court

August 19, 2022 | Read More

NCLA Appeals to First Circuit Over IRS’s Unlawfully Seizing Cryptocurrency Data of Thousands

July 15, 2021

Watch: NCLA Releases Tax Day Video on IRS’s Unlawful Collection of Cryptocurrency Owners’ Data

May 17, 2021

District Court Ruling Would Permit IRS to Violate Constitutional Rights with Impunity

March 23, 2021 | Read More

SEE 7 PRESS RELEASES
IN THE MEDIA

Court Urged To Keep Suit Over IRS Crypto Doc Seizure Alive

Law360

May 12, 2023

Crypto Crackdown Drives ‘John Doe’ Record Demands from IRS

Bloomberg Tax

February 7, 2023

Crypto User Appeals Dismissal of Suit Over IRS Records Grab

Bloomberg Tax

February 7, 2023

Court Tosses Challenge To IRS Crypto Exchange Summons

Law360

February 7, 2023

IRS Seeks Dismissal of Cryptocurrency Records Seizure Lawsuit

Bloomberg Tax

February 7, 2023

SEE 6 MEDIA MENTIONS

CASE HIGHLIGHTS

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