A resident living in Washington dispatched a petition to a federal judge to stop IRS or Internal Revenue Service, which brings most of the revenue needed to fund the federal government, from investigating data in regard of his bitcoin holdings that he kept in Bitstamp exchange, a bitcoin exchange allowing trading between USD currency and bitcoin cryptocurrency.
But the district court issued an order to the IRS to narrow the scope of a summons issued to the exchange by IRS indeed. John Coughenour, judge of the district court, abnegated two contentions to re-echo with cryptocurrency users because the petitioner had the right to get financial privacy and the tax collector cannot be trusted to protect impressible personal data.
The petition was made after an audit started being made by the agency to William Zietzke’s cryptocurrency holdings and transactions following the filing of an amended tax return. But Zietzke made a mistake thinking a return of 2016 to be of 2017 and filed an amended return presenting a capital gain of only $410 and requesting a refund of taxes he’d paid.
IRS issued a summons to Bitstamp in response to the request of Zietzke to check out all transactions of the man since the opening of the account. But the judge is agreeing with Zietzke because IRS already has the information it needs but IRS broken down the administrative steps and it is harmful for privacy issue. But all the arguments have been thrown out by the judge and he said auditing all his holdings and transactions satisfies legal requirements for showing a legitimate purpose. But the judge’s order told the IRS to confine its request to only those transactions conducted in 2016.
Citing the landmark 1976 ruling in United States v. Miller, the judge wrote the supreme court held that a person in deficit of a reasonable expectation of privacy in a bank’s record pertaining to the person. One of the arguments says that the IRS is unable to adequately secure such highly sensitive information. But the judge thinks it not to be a legal argument. Within two weeks, the IRS has to file an amended summons to Bistamp. And Zietzke has also one week to respond. But none of them responded and a spokesman of IRS said federal law impedes the IRS from discussing specific taxpayers. But the judge permits the IRS to conclude the audit collecting information.