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The Verge | | Jun 21, 2022
Image: Alex Castro, The Verge
Last week, Coin Center filed a legal challenge in the United States District Court for the Eastern District of Kentucky, naming as defendants Janet Yellen as a representative of the Treasury Department, IRS commissioner Charles Rettig, and US attorney general Merrick Garland on behalf of the government as a whole.
A blog post from the advocacy group says that the legal complaint aims to overturn “unconstitutional financial surveillance.” If Coin Center’s challenge is successful, it could have implications far beyond cryptocurrency due to how the reporting law was passed in the first place.
See: NCFA Response to FINTRAC’s ‘Knee Jerk’ Regulations Requiring Donation Crowdfunding Platforms to Register and Comply with AML/ATF Legislation
The authors, Coin Center executive director Jerry Brito and research director Peter Van Valkenburgh, write:
Our suit leads with two major claims: (1) forcing ordinary people to collect highly intrusive information about other ordinary people, and report it to the government without a warrant, is unconstitutional under the Fourth Amendment; and (2) 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.
When the new requirement was made law through the infrastructure bill, it wasn’t written as a new statute: rather, it was an amendment to an existing part of the US tax code — Section 6050I — that has been on the books for almost 40 years.
The 6050I rule states that any person who receives more than $10,000 in cash as part of a business transaction must provide details of the sender to the IRS through a particular form. This cash reporting requirement, which became law in 1984, came on the heels of the Bank Secrecy Act of 1970: one of the first major laws to address money laundering in the United States. Together, the new reporting laws passed in the ’70s and ’80s helped law enforcement agencies to detect and deter money laundering by creating requirements to file documentation that made it easier to track cash transfers and imposing penalties if such documents weren’t filed.
See: Privacy laws might prove to be a blessing in disguise for crypto
The law has been in effect ever since, without any significant change until now. In the infrastructure bill, a critical change of eight words was made to 6050I, expanding the definition of cash to include “any digital asset” and thereby extending the tax code’s reporting requirements to cryptocurrency. And because of this construction, a successful challenge on behalf of cryptocurrency users could mean overturning the statute completely.
Continue to the full article –> here
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