A US district court in California has rejected a petition filed by a Coinbase user attempting to block the Internal Revenue Service (IRS) from accessing his transaction records.
Judge Araceli Martínez-Olguín ruled Wednesday that the petitioner, Roger Metz, failed to comply with mandatory procedural rules requiring notification to the U.S. Attorney General, giving the tax agency another victory in its ongoing efforts to police the tax compliance of cryptocurrencies.
The dismissal highlights the procedural hurdles faced by investors trying to challenge the government’s broad information-gathering powers. This is a stark reminder that suing the federal government requires strict adherence to administrative protocols, regardless of the merits of the privacy arguments.
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Procedural misstep ends privacy bid
Roger Metz filed a motion in the Northern District of California in May 2025 seeking to quash an IRS subpoena issued to Coinbase. The tax agency sought Metz’s financial records to conduct an audit of his 2022 federal income tax return. Metz’s legal team argued that the subpoena was too broad, violated his privacy rights and did not meet basic administrative requirements.
According to court filings, Metz argued that the subpoena was not necessary because he had already identified the reporting error on his 2022 return, filed an amendment, and paid the additional tax due before the IRS formally required the data in 2024. However, the court did not consider the merits of these arguments.
Judge Martínez-Olguín dismissed the case solely on procedural grounds. Under the Federal Rules of Civil Procedure, a plaintiff suing the U.S. government must notify three specific parties within 90 days: the local U.S. Attorney, the agency being challenged (the IRS), and the U.S. Attorney General in Washington, DC.
While Metz successfully notified the local prosecutor and the IRS, he admitted to failing to notify the attorney general within the statutory deadline. “In his opposition brief, Metz offers no explanation for his failure to serve the United States within 90 days of filing his petition, much less that he had good reason,” Judge Martínez-Olguín wrote. “Dismissal of a case is appropriate when there is insufficient service of process.”
The erosion of the third party doctrine
The move reinforces the uphill battle crypto users face when contesting IRS John Doe summonses. The legal landscape has largely been defined by the “third party doctrine,” a principle that emerged from the 1976 Supreme Court case. United States v. Millerwhich established that individuals have no Fourth Amendment expectation of privacy in records held by financial institutions.
Crypto proponents have long argued that blockchain data is separate from traditional banking records, but federal courts have been slow to agree. The dismissal echoes the recent failure of James Harper, another cryptocurrency user whose long-running privacy lawsuit against the IRS was dismissed, with the Supreme Court denying certiorari earlier this year.
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Audit risks and future reporting
For American investors, the implications are clear: centralized exchanges are not privacy vaults. The IRS has successfully used John Doe subpoenas since 2016 to force exchanges like Coinbase, Kraken, and Circle to hand over user data.
While Bitcoin adoption is clearly booming in the United States, the regulatory infrastructure is strengthening to match this scale. Starting in 2026, the implementation of Form 1099-DA will require digital asset brokers to report income directly to the IRS, likely making these types of summons wars obsolete by automating the data transfer process.
Until direct reporting becomes the norm, the IRS will likely continue to use subpoena power to bridge the gap. Taxpayers who rely on procedural delays or privacy claims to protect their assets find fewer avenues for recourse in federal courts. As mandates tighten, the days of relying on foreign exchange obscurity for tax planning are effectively over.
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Disclaimer: Coinspeaker is committed to providing unbiased and transparent reporting. This article is intended to provide accurate and current information, but should not be considered financial or investment advice. Because market conditions can change quickly, we encourage you to verify the information for yourself and consult a professional before making any decisions based on this content.
Daniel Frances is a technical writer and Web3 educator specializing in macroeconomics and DeFi mechanics. Hailing from crypto since 2017, Daniel leverages his experience in on-chain analytics to write evidence-based reports and in-depth guides. He holds certifications from the Blockchain Council and is dedicated to providing “insight gain” that overcomes market hype to find real utility for blockchain.
