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What constitutional violations are Coinbase protocols with Taxes on Crypto going directly to IRS, Ie 25%?

BE · 2026-10-29 · 2 min read · treechat · tx bc21f6…0744 · block 973,202

What constitutional violations are Coinbase protocols with Taxes on Crypto going directly to IRS, Ie 25%? If you're asking whether a hypothetical 25% automatic withholding on cryptocurrency transactions sent directly to the IRS through Coinbase could violate the U.S. Constitution, several constitutional arguments are often raised, but whether they would succeed would depend on the specific law and how it is implemented. Possible constitutional issues include: Fifth Amendment - Due Process Citizens cannot be deprived of property without due process of law. Opponents might argue that automatic withholding seizes funds before a taxpayer's actual tax liability is determined. The government would likely respond that tax withholding is already constitutional in many contexts (such as wage withholding). Fourth Amendment - Privacy and Search Concerns Mandatory reporting of cryptocurrency transactions to the IRS raises privacy concerns. Courts have generally held that financial records held by third parties receive less Fourth Amendment protection under the "third-party doctrine." Similar reporting requirements already exist for banks and brokerages. Fifth Amendment - Takings Clause Some might argue that withholding is a taking of property. Historically, courts have distinguished taxation from a constitutional "taking," making this argument difficult to win. Article I Taxing Power Congress has broad constitutional authority to levy and collect taxes. If Congress enacted a crypto withholding regime similar to payroll withholding, courts would likely begin with a presumption of constitutionality. Equal Protection Arguments (via the Fifth Amendment) If cryptocurrency holders were treated substantially differently from stock, bond, or real-estate investors without a rational basis, a challenge could be raised. The government would likely argue that crypto presents unique compliance and reporting challenges. Important distinction If the 25% withholding is merely a prepayment of tax (similar to payroll withholding), it is much more likely to survive constitutional challenge. If the government attempted to confiscate 25% of every crypto transaction regardless of gain, loss, or actual tax liability, constitutional challenges under Due Process and Equal Protection would be stronger. If you're referring to a specific Coinbase policy, IRS rule, or proposed legislation, I can look up the exact program and analyze the constitutional issues based on the actual text.