Coin Center Sues U.S. Treasury and IRS Over ‘Unconstitutional’ Tax Reporting Rule

Blockchain advocacy group Coin Center filed a lawsuit on Friday against the U.S. Treasury Department and the IRS for allegedly drafting an unlawful amendment to the controversial infrastructure bill.

The lawsuit against the Treasury Department alleged that a 2021 infrastructure legislation’s requirement for tax reporting is “unconstitutional,” specifically challenging the amendment of Section 6050I of the Tax Code.

Under the amendment, U.S. citizens would be required to report information about any transaction of at least $10,000, which includes providing the sender’s name, social security number, and date of birth.

“In 2021, President Biden and Congress amended a little-known tax reporting mandate. If the amendment is allowed to go into effect, it will impose a mass surveillance regime on ordinary Americans […] The reporting mandate would force Americans using cryptocurrency to share intrusive details about themselves, both with each other and with the federal government. Under the terms of the mandate, everyday senders and receivers of cryptocurrency would be forced to reveal their names, Social Security numbers, home addresses another personal identifying information,” the complaint reads.

Prior to the bill becoming law last year, Coin Center served as part of the crypto advocates that kicked against some of its crypto privisions. Additionally, many stakeholders considered several provisions in the bill to be unconstitutional and unproductive at the time.

Since its passage, the organization claims it has worked with Congress to find ways to repeal and amend some of the law provisions. In addition, some provisions will require Treasury Department guidance for their implementation. 

While the Act is set to go into effect in 2024, the nonprofit organization claims it will significantly affect the crypto industry, including NGOs receiving anonymous donations.

Violation of the Fourth Amendment?

In its complaint, Coin Center claims that the amendment violates the Fourth Amendment, subjecting anyone involved in crypto transactions to “unreasonable searches and seizures.”

It also points to the U.S. Supreme Court ruling which prevents the government from compelling organizations to keep and report a list of its members.

“Demanding that politically active organizations create and report lists of their donors’ names and identifying information to the government is unconstitutional under the First Amendment,” the public announcement reads.

The announcement also calls on stakeholders in the crypto community to support the lawsuit:

“We are considering adding additional co-plaintiffs to this suit, so if you might fit this description and are interested, please get in touch.”

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