The IRS Claims Your Personal Digital Information Does Not Belong To You

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When the IRS secretly demands your financial records and private information from a third party, without a warrant, what rights do you still have? That’s the question at the heart of Harper v. O’Donnell, which is before the Supreme Court.

New Hampshire resident Jim Harper is fighting back against the IRS after discovering he was swept up in a massive digital dragnet. The case could redefine how the Fourth Amendment applies in the age of digital cloud storage; and it may determine whether your emails, location history, search queries, and financial records that tech companies store on your behalf are treated as your own personal property.

In 2016, the IRS ordered the cryptocurrency exchange Coinbase to hand over transaction records of over 14,000 customers. Harper was among them and only learned of the government’s records grab after the IRS sent him a warning letter, mistakenly suggesting he’d underreported his cryptocurrency income. He soon discovered the IRS had his transaction logs, wallet addresses, and public keys—allowing the agency to monitor any future transactions he made.

Harper didn’t do anything wrong. He’d simply used a legal platform to buy and sell cryptocurrency. But his digital footprint became visible to the government overnight.

Now he’s suing the IRS not just to protect his own privacy, but to force the agency to delete the records it obtained and to establish a broader legal principle: that digital records stored on third-party platforms are the property of the user who created them.

Harper argues that Coinbase’s own terms of service make clear that the data belong to him, not the platform; and therefore, the IRS should have been required to get a warrant before accessing the information. The Federal Government, including the IRS, and local police argue that recognizing ownership would impede surveillance and law enforcement. 

Lower courts dismissed Harper’s arguments, citing the “third-party doctrine;” a legal doctrine from the 1970s that says Americans lose their Fourth Amendment protections if they share information or records with businesses.

Today, when nearly every aspect of our lives is stored and synced through digital intermediaries, the doctrine has become a gaping loophole for mass surveillance. Financial regulators, in particular, are eager to exploit this loophole to vacuum up Americans’ financial records without warrants.

Harper’s case attempts to bring digital records back within Fourth Amendment protections. The Constitution protects our property, and the Supreme Court has long recognized that seizures of personal property require legal justification. When judges review digital surveillance, the first question they must ask is not whether data were shared with a third party, but whether the records belong to the person who created those records.

Ownership doesn’t vanish because you entrust something to another party. Paper records stored in a safe-deposit at a bank still belong to you; and the government can’t rifle through it without a warrant. Digital records deserve the same treatment. 

Many state laws already recognize this principle on precedent; and in 2023, the Colorado Supreme Court ruled Google users “own their Google content,” including their search histories. 

Congress should bolster privacy rights by modernizing the 1986 Stored Communications Act, which allows warrantless access to many digital records older than 180 days. States could also pass clearer statutes declaring that digital records are personal property. 

Tech companies can also play a role by strengthening privacy protections in their terms of service. If platforms make clear that users retain ownership of their data and records, courts will be more willing to recognize Fourth Amendment claims like Harper’s.

The IRS’ surveillance of Coinbase should serve as a wake-up call for all Americans. As the Supreme Court has already ruled, the Fourth Amendment was designed “to place obstacles in the way of a too permeating police surveillance.” Unless courts, lawmakers, and companies protect Fourth Amendment rights and customers’ privacy, law enforcement agencies will increasingly treat Americans’ sensitive digital records as fair game—with no warrant required.

The Cato Institute has authored an amicus brief in Harper v. O’Donnell, supporting Harper.✪

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