U.S. Supreme Court asked to fix doctrine that denies individuals 4th Amendment rights

The Supreme Court is being asked to hear a case that the justices could use to reform – fix actually – a practice through which the government can deny individuals their 4th Amendment rights.

It is the New Civil Liberties Alliance that is asking for a review of the Harper v. O'Donnell case that concerns financial records unlawfully seized by the Internal Revenue Service.

Sheng Li, litigation counsel for the group, said, "The judge-made third-party doctrine was ill-conceived from the start, with dozens of states repudiating it over the past half century. The doctrine has become even less defensible in the modern age, where sharing confidential information with third-party companies such as internet, healthcare, and even cryptocurrency companies, has become an increasingly common part of American life."

The legal team explained the IRS took financial records belonging to NCLA client James Harper and more than 14,000 others from the Coinbase cryptocurrency exchange through a "John Doe" summons.

"IRS took Mr. Harper's documents without any individualized suspicion to believe he had under-reported his income or failed to pay taxes. The Supreme Court should take the opportunity to fix the third-party doctrine, which the government has relied on to strip away the Fourth Amendment rights of millions of Americans who share data, such as internet browsing histories and medical records, with third-party companies," the alliance explained.

The case history includes a ruling from the 1st Circuit Court of Appeals that Harper could take the IRS to federal court for gathering private financial information about his use of virtual current from third-party exchanges without a lawful subpoena.

However, a federal judge in New Hampshire then failed Harper, by dismissing his case against IRS in May 2023, incorrectly ruling that he had failed to state a claim. The First Circuit invoked the third-party doctrine to uphold that dismissal last September.

The NCLA pointed out, "The Supreme Court must revisit the third-party doctrine to recognize Fourth Amendment protection for Mr. Harper's cryptocurrency data and other digital records, which Americans now routinely store with third-party service providers. Digital records are a modern-day individual's 'papers' and 'effects' that the Fourth Amendment explicitly safeguards against government's prying eyes. Justice Sonya Sotomayor has observed that the third-party doctrine is 'ill suited' to the digital age, in which people reveal a great deal of information about themselves to third parties in the course of carrying out mundane tasks."

"The Constitution promises security to Americans in their 'papers and effects.' Until the Supreme Court clarifies its rulings for the digital age, that promise is unfulfilled," said John Vecchione, a litigation counsel for NCLA.

It was in 2019 that the IRS notified Harper that it had obtained his financial records concerning ownership of bitcoin "without any particularized suspicion of wrongdoing."

The IRS took those records "without a valid subpoena, court order, or judicial warrant based on probable cause."