The U.S. Supreme Court has declined to hear a case involving a Coinbase user who alleged that his Fourth Amendment rights were violated when data was sent to the Internal Revenue Service (IRS).

In a notice on Monday, the U.S. Supreme Court refused to review the case brought by James Harper against the IRS and several of its officials. The case originated from the IRS compelling Coinbase to submit certain user data through a "John Doe" subpoena, leading Harper to file a lawsuit against the federal tax collection agency in 2020.

Harper's initial complaint accused the IRS and its officials of "illegal search and seizure of [his] private financial information," in violation of the Fourth Amendment of the U.S. Constitution.

The U.S. District Court for the District of New Hampshire dismissed the case in March 2021, after which Harper appealed to the First Circuit Court, which also ruled against him.

Since the Supreme Court did not consider making a potentially different ruling on the case, the lower court's decision will remain in effect, setting an important precedent for the digital privacy rights of cryptocurrency users in the U.S.

Coinbase submitted an amicus brief in support of Harper's application, claiming that if the lower court's ruling stands, the U.S. government could "track every past cryptocurrency transaction of users and monitor every future cryptocurrency transaction."

"We believe in tax compliance, but this goes far beyond narrow and targeted requests, and far beyond the scope of cryptocurrency," Coinbase Chief Legal Officer Paul Grewal stated in an X post on April 30. "This applies to banks, phone companies, internet service providers, email, anything you can think of […] you should have the same privacy rights over your inbox or account as you do over the letters in your mailbox."

Cryptocurrency tax software company CoinLedger reported a 758% increase in users mentioning IRS letters in support chats. This suggests that the agency may be sending out more letters due to unreported or underreported digital asset transactions. Although the company reported this data before the Supreme Court declined to review Harper's application, it hints at the implications for user privacy.

"[IRS letters] do not necessarily indicate wrongdoing," CoinLedger stated. "In many cases, the recipients are simply cryptocurrency investors who learned about the IRS through John Doe subpoenas issued to exchanges like Coinbase and Poloniex."

Cointelegraph reached out to a Coinbase spokesperson for comment but had not received a response by the time of publication.

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Original article: “U.S. Supreme Court Won't Review IRS Case Involving Coinbase User Data”

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