A US District Court in California has dismissed a petition by a Coinbase user attempting to block the Internal Revenue Service (IRS) from accessing his transaction records.
Judge Araceli Martínez-Olguín ruled on Wednesday that the petitioner, Roger Metz, failed to follow mandatory procedural rules requiring notification of the US Attorney General, handing the tax agency another victory in its ongoing effort to police cryptocurrency tax compliance.
The dismissal highlights the procedural hurdles facing investors who attempt to challenge the government’s broad information-gathering powers. It serves as a stark reminder that suing the federal government requires strict adherence to administrative protocols, regardless of the merits of the privacy arguments involved.
Procedural Misstep Ends Privacy Bid
Roger Metz filed a petition in the Northern District of California in May 2025 seeking to quash an IRS summons issued to Coinbase. The tax agency sought Metz’s financial records to conduct an audit of his 2022 federal tax return. Metz’s legal team argued that the summons was overbroad, violated his privacy rights, and failed to meet basic administrative requirements.
According to court filings, Metz contended that the summons was unnecessary because he had already identified the reporting error on his 2022 return, filed an amendment, and paid the additional tax owed before the IRS formally demanded the data in 2024. However, the court did not reach 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 US government must serve notice to three specific parties within 90 days: the local US Attorney, the agency being challenged (the IRS), and the US Attorney General in Washington, D.C.
While Metz successfully notified the local attorney and the IRS, he admitted to failing to serve the Attorney General within the statutory window. “In his opposition brief, Metz does not offer any explanation for his failure to serve the United States within 90 days after filing his petition, much less that he had good cause,” Judge Martínez-Olguín wrote. “Dismissal of a case is proper when there is insufficient service of process.”
The Erosion of the Third-Party Doctrine
This ruling reinforces the steep uphill battle crypto users face when challenging IRS John Doe summonses. The legal landscape has been largely defined by the “third-party doctrine,” a principle stemming from the 1976 Supreme Court case United States v. Miller, which established that individuals have no Fourth Amendment expectation of privacy in records held by financial institutions.
Crypto advocates have long argued that blockchain data is distinct from traditional banking records, but federal courts have been slow to agree. This dismissal echoes the recent failure of James Harper, another crypto user whose long-running privacy suit against the IRS was dismissed, with the Supreme Court denying certiorari earlier this year.
Audit Risks and Future Reporting
For US investors, the implications are clear: centralized exchanges are not privacy vaults. The IRS has successfully utilized John Doe summonses since 2016 to compel exchanges like Coinbase, Kraken, and Circle to hand over user data.
While Bitcoin adoption is clearly booming across the US, regulatory infrastructure is tightening to match that scale. Starting in 2026, the implementation of Form 1099-DA will require digital asset brokers to report proceeds directly to the IRS, likely rendering these types of summons wars obsolete by automating the data transfer process.
Until direct reporting becomes standard, the IRS will likely continue to use summons power to bridge the gap. Taxpayers relying on procedural delays or privacy claims to shield assets are finding fewer avenues for relief in federal court. As mandates tighten, the era of relying on exchange obscurity for tax planning is effectively over.
