United States Court of Appeals

For the First Circuit

No. 21-1316

JAMES HARPER,

Plaintiff, Appellant,

v.

CHARLES P. RETTIG, in his official capacity as Commissioner of 

the Internal Revenue Service; INTERNAL REVENUE SERVICE; JOHN DOE

IRS AGENTS 1-10,

Defendants, Appellees.

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF NEW HAMPSHIRE

[Hon. Joseph A. DiClerico, Jr., U.S. District Judge]

Before

Kayatta, Lipez, and Gelpí,

Circuit Judges.

Richard Abbott Samp, with whom Aditya Dynar, Caleb 

Kruckenberg, and New Civil Liberties Alliance were on brief, for 

appellant.

Kathleen E. Lyon, with whom John J. Farley, Acting United 

States Attorney, David A. Hubbert, Acting Assistant Attorney 

General, Francesca Ugolini, and Jennifer M. Rubin were on brief, 

for appellees.

August 18, 2022
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LIPEZ, Circuit Judge. In August 2019, the Internal 

Revenue Service ("IRS") notified appellant James Harper that it 

possessed information about his virtual currency accounts and 

transactions and warned him that he could face civil or criminal 

enforcement action for inaccurately reporting such transactions. 

Believing that the IRS had acquired his personal financial records 

from a digital currency exchange via a third-party summons, see 26 

U.S.C. §§ 7602 and 7609, appellant sued the IRS and its agents for 

injunctive relief and monetary damages, alleging that the thirdparty summons process violated his constitutional and statutory 

rights. The district court concluded that it lacked subject matter 

jurisdiction over appellant's suit under the Anti-Injunction Act

of the Internal Revenue Code, 26 U.S.C. § 7421,1 and dismissed the 

complaint.2 We vacate the judgment of the district court.

I.

A. Factual Background

We draw the relevant facts from appellant's complaint. 

In 2013, appellant opened an account with Coinbase, which he 

describes as "a non-party digital currency exchange that 

1 The Anti-Injunction Act of the Internal Revenue Code is 

distinct from the better-known Anti-Injunction Act, codified at 

28 U.S.C. § 2283, which generally prohibits the federal courts 

from enjoining proceedings in state courts. See 28 U.S.C. 2283.

2 The district court also dismissed appellant's claims for 

money damages under the doctrine of sovereign immunity. Appellant 

does not appeal the dismissal of those claims.
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facilitates transactions in virtual currencies," including 

bitcoin. Appellant deposited bitcoin in his Coinbase account in 

2013 and 2014. Appellant began liquidating his Coinbase holdings 

of bitcoin in 2015, ultimately transferring what remained in his 

account to a hardware wallet3 such that, by early 2016, he no 

longer held bitcoin via Coinbase. Appellant declared and reported 

income from his Coinbase transactions on his 2013, 2014, 2015, and 

2016 income tax returns. Beginning in 2016, appellant and his 

wife sold bitcoin through the digital exchanges Abra and Uphold. 

Appellant declared and paid taxes on the capital gains on his 

bitcoin holdings in tax years 2016, 2017, 2018, and 2019. 

In 2016, the IRS filed an ex parte "John Doe" 

administrative summons on Coinbase in the U.S. District Court for 

the Northern District of California.4 See United States v. 

3 A hardware wallet is a "secure offline" version of a virtual 

currency wallet that "can be used securely and interactively." 

Virtual Currency Storage, IRM 5.1.18.20.2 (July 17, 2019). 

Hardware wallets "are immune to computer viruses, the keys stored 

cannot be transferred out of the device in plaintext (unencrypted), 

and in most instances their software is not open source." Id. In 

contrast, "[a] software wallet is connected to the internet, 

downloaded, and installed on a computer or mobile device and stores 

private keys on the device's hard drive." Id.

4 Section 7602 of the Internal Revenue Code authorizes the 

IRS to issue summonses "[f]or the purpose of ascertaining the 

correctness of any return, making a return where none has been 

made, determining the liability of any person for any internal 

revenue tax or the liability at law or in equity of any transferee 

or fiduciary of any person in respect of any internal revenue tax, 

or collecting any such liability." 26 U.S.C. § 7602(a). A "John 

Doe" summons is a third-party summons issued "where the IRS does
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Coinbase, Inc., No. 17-cv-1431-JSC, 2017 WL 5890052, at *1 (N.D. 

Cal. Nov. 28, 2017). Under § 7609 of the Internal Revenue Code, 

a "John Doe" summons can issue only after a court proceeding in 

which the IRS establishes that 

(1) the summons relates to the investigation 

of a particular person or ascertainable group 

or class of persons, 

(2) there is a reasonable basis for believing 

that such person or group or class of persons 

may fail or may have failed to comply with any 

provision of any internal revenue law, and 

(3) the information sought to be obtained from 

the examination of the records or testimony 

(and the identity of the person or persons 

with respect to whose liability the summons is 

issued) is not readily available from other 

sources.

26 U.S.C. § 7609(f). The initial summons sought nine categories 

of "information regarding United States persons who at any time 

during the period January 1, 2013 through December 31, 2015 

conducted transactions in a convertible virtual currency as 

defined in IRS Notice 2014-21." Coinbase, 2017 WL 5890052, at *1.

After Coinbase opposed the initial summons, the IRS 

narrowed its scope. The narrowed summons sought the following 

information, with respect to accounts "with at least the equivalent 

of $20,000 in any one transaction type . . . in any one year during 

the 2013-2015 period": 

Request 1: [Account] registration records for 

each [account] owned or controlled by the user 

not know the identity of the taxpayer[s] under investigation." 

Tiffany Fine Arts, Inc. v. United States, 469 U.S. 310, 316 (1985).
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during the period stated above limited to 

name, address, tax identification number, date 

of birth, account opening records, copies of 

passport or driver's license, all wallet 

addresses, and all public keys for all 

[accounts].

Request 2: Records of Know-Your-Customer 

diligence.

Request 3: Agreements or instructions granting 

a third-party access, control, or transaction 

approval authority.

Request 4: All records of [account] activity 

including transaction logs or other records 

identifying the date, amount, and type of 

transaction . . ., the post transaction 

balance, the names or other identifiers of 

counterparties to the transaction; requests or 

instructions to send or receive bitcoin; and, 

where counterparties transact through their 

own Coinbase [accounts], all available 

information identifying the users of such 

accounts and their contact information.

Request 5: Correspondence between Coinbase and 

the user or any third party with access to the 

[account] pertaining to the [account] opening, 

closing, or transaction activity.

Request 6: All periodic statements of account 

or invoices (or the equivalent).

Coinbase, 2017 WL 5890052, at *2. Coinbase and John Doe 4, who 

was permitted to intervene, opposed the narrowed summons. Id. 

Although appellant did not intervene in the litigation, he alleges

that he "participate[d] as an expert in an amicus filing."5 After

5 "Jim Harper" is listed as an attorney in the signature block 

of the amicus brief filed by the Competitive Enterprise Institute. 

See Brief of Amicus Curiae Competitive Enterprise Institute in 
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hearing argument, the district court permitted the government to 

enforce the summons with respect to Requests 1, 4, and 6. Id. at 

*7.6 

In August 2019, appellant received a letter from the IRS

notifying him that the agency "ha[d] information that you have or 

had one or more accounts containing virtual currency but may not 

have properly reported your transactions involving virtual 

currency." The letter warned him that he could face civil or 

criminal enforcement action if he failed to accurately report his

virtual currency transactions. 

B. Procedural History

In July 2020, appellant filed a complaint against the 

IRS, Commissioner Charles P. Rettig in his official capacity 

(collectively, "the IRS"), and ten unidentified IRS agents. The 

amended complaint alleges that the IRS and its agents violated the 

Fourth and Fifth Amendments, as well as 26 U.S.C. § 7609(f), by 

acquiring appellant's personal financial information from Abra and 

Coinbase through the third-party summons process.7 Specifically, 

Opposition to Petition to Enforce Internal Revenue Service Summons 

at 15, Coinbase, 2017 WL 5890052, ECF No. 50-2.

6 The district court further found that Coinbase and John 

Doe 4 had failed to show that the government engaged in abuse of 

process or to demonstrate their entitlement to an evidentiary 

hearing on whether the government acted in bad faith. Coinbase, 

2017 WL 5890052, at *8.

7 Appellant suggests that the "IRS probably obtained [his] 

private information either from an unlawful John Doe subpoena 
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appellant contends that he had an ownership interest, as well as 

a reasonable and subjective expectation of privacy, in the personal 

financial information Abra and Coinbase maintained about his 

accounts. He contends that the IRS's acquisition of that 

information from Coinbase and Abra violated the Fourth Amendment 

because the IRS lacked particularized suspicion that he had 

violated any laws and the IRS did not obtain a judicial warrant or 

subpoena prior to accessing his information. Appellant also 

alleges that this "unlawful seizure" violated his rights under the 

Fifth Amendment because of the IRS's failure to provide direct 

notice of, and an opportunity to challenge, the third-party 

summons. Appellant initially sought damages and declaratory and 

injunctive relief, including an order requiring the IRS to expunge 

his financial information from its records. 

The district court granted the IRS's motion to dismiss 

appellant's request for money damages as to the IRS and the 

Commissioner based on sovereign immunity. The court also dismissed 

appellant's money-damages claims as to the individual IRS agents 

under Bivens8 for failure to state a claim, finding that 

appellant's Fourth and Fifth Amendment claims extended Bivens to 

issued to Coinbase or without any subpoena issued to Abra or a 

comparable exchange." 

8 Bivens v. Six Unknown Named Agents of Fed. Bureau of 

Narcotics, 403 U.S. 388 (1971).
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a new context and that special factors counseled against such an 

extension. Appellant does not appeal either of those decisions. 

Finally, the district court dismissed his claims for declaratory 

and injunctive relief for lack of subject matter jurisdiction, 

finding that the Anti-Injunction Act of the Internal Revenue Code, 

26 U.S.C. § 7421, represents an exception to the Administrative 

Procedure Act's ("APA") waiver of sovereign immunity, 5 U.S.C. 

§ 702. Appellant timely appealed.

II.

A. Standard of Review

We review de novo dismissals for lack of subject matter 

jurisdiction. Lyman v. Baker, 954 F.3d 351, 359 (1st Cir. 2020). 

Although dismissals under Rules 12(b)(1) and 12(b)(6) are 

"conceptually distinct, . . . the same basic principles apply in 

both situations." Id. (quoting Hochendoner v. Genzyme Corp., 823 

F.3d 724, 730 (1st Cir. 2016)). Ignoring "statements in the 

complaint that simply offer legal labels and conclusions or merely 

rehash cause-of-action elements," we take the complaint's nonconclusory, non-speculative facts as true and draw all reasonable 

inferences in the plaintiff's favor to determine whether the 

complaint indicates that the court has subject matter 

jurisdiction. Id. at 360 (quoting Schatz v. Republican State 

Leadership Comm., 669 F.3d 50, 55 (1st Cir. 2012)). We may also 
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consider information attached to or incorporated into the 

complaint and facts susceptible to judicial notice. Id.

B. Discussion

The doctrine of sovereign immunity prevents the United 

States from being sued without its consent. United States v. Dalm, 

494 U.S. 596, 608 (1990); Muirhead v. Mecham, 427 F.3d 14, 17 (1st 

Cir. 2005). "[T]he terms of [the United States'] consent to be 

sued in any court define that court's jurisdiction to entertain 

the suit." Dalm, 494 U.S. at 608 (quoting United States v. Testan, 

424 U.S. 392, 399 (1976)). A waiver of sovereign immunity "'cannot 

be implied but must be unequivocally expressed,'" and, "[e]ven 

then, the waiver must be strictly construed." Muirhead, 427 F.3d 

at 17 (quoting United States v. King, 395 U.S. 1, 4 (1969)). 

Appellant identifies the waiver provision of the APA, 

5 U.S.C. § 702, as the basis for subject matter jurisdiction. 

Section 702 of the APA provides, in part:

A person suffering legal wrong because of 

agency action, or adversely affected or 

aggrieved by agency action within the meaning 

of a relevant statute, is entitled to judicial 

review thereof. An action in a court of the

United States seeking relief other than money 

damages and stating a claim that an agency or 

an officer or employee thereof acted or failed 

to act in an official capacity or under color 

of legal authority shall not be dismissed nor 

relief therein be denied on the ground that it 

is against the United States or that the 

United States is an indispensable party. 
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5 U.S.C. § 702 (emphases added). Appellant's suit, which seeks 

injunctive and declaratory relief from IRS action taken pursuant 

to its statutory authority under 26 U.S.C. §§ 7602 and 7609,

appears to fit comfortably within the plain language of this 

waiver.9 But § 702 also includes two limitations on the United 

States' waiver of sovereign immunity: it expressly leaves in place 

"other limitations on judicial review or the power or duty of the 

court to dismiss any action or deny relief on any other appropriate 

legal or equitable ground," and it withholds "authority to grant 

relief if any other statute that grants consent to suit expressly 

or impliedly forbids the relief which is sought." Id.; see also

Match-E-Be-Nash-She-Wish Band of Pottawatomi Indians v. Patchak, 

567 U.S. 209, 215 (2012) (describing the second exception).

9 On appeal, appellant also invokes the exception to sovereign 

immunity recognized in Larson v. Domestic & Foreign Commerce Corp., 

337 U.S. 682 (1949). As we have previously explained, Larson

described two situations in which a government officer is not 

entitled to sovereign immunity: (1) when the officer acts beyond 

his statutory authority; and (2) when "the statute that confers 

the power to act is unconstitutional or if the officer exercises 

that power in an unconstitutional manner." Muirhead, 427 F.3d at 

19. "[A] suit, although nominally aimed at an official, will be 

considered one against the sovereign" -- and therefore not within 

the Larson exception -- "'if the judgment sought would . . . 

interfere with the public administration, or if the effect of the 

judgment would be to restrain the [g]overnment from acting, or to 

compel it to act.'" Id. at 18 (quoting Dugan v. Rank, 372 U.S. 

609, 620 (1963)). Appellant's suit does not fall within the Larson

exception because the remedies it seeks -- an order directing the 

IRS to expunge its records of appellant's personal financial 

information and a declaration that the process through which the 

IRS acquired this information was unlawful -- are clearly aimed at 

the IRS itself.
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The IRS argues -- and the district court agreed -- that 

the Anti-Injunction Act of the Internal Revenue Code, 26 U.S.C. 

§ 7421, is a statutory exception to the United States' waiver of 

sovereign immunity in § 702.10 The Anti-Injunction Act provides 

that "no suit for the purpose of restraining the assessment or 

collection of any tax shall be maintained in any court by any 

person, whether or not such person is the person against whom such 

tax was assessed." 26 U.S.C. § 7421(a).11 Relying on Colangelo

v. United States, 575 F.2d 994, 996 (1st Cir. 1978), the IRS 

contends that the Anti-Injunction Act bars appellant's suit 

because it seeks to restrain "activities which are intended to or 

may culminate in the assessment or collection of taxes."

The Supreme Court recently clarified that the AntiInjunction Act "is 'not keyed to all activities that may improve 

a [s]tate's ability to assess and collect taxes.' It is instead 

'keyed to the acts of assessment [and] collection themselves.'" 

CIC Servs., LLC v. IRS, 141 S. Ct. 1582, 1589 (2021) (quoting 

Direct Mktg. Ass'n v. Brohl, 575 U.S. 1, 11-12 (2015)).12 Noting 

10 The IRS also argues that the Declaratory Judgment Act, 

28 U.S.C. § 2201, precludes jurisdiction over appellant's suit. 

Appellant and the IRS agree, however, that the Anti-Injunction Act 

and the Declaratory Judgment Act are interpreted in the same way. 

Consequently, we refer only to the Anti-Injunction Act.

11 The statute contains several exceptions not relevant here. 

See 26 U.S.C. § 7421(a).

12 Direct Marketing involved the Tax Injunction Act, which 

"was modeled on the Anti–Injunction Act" and contains nearly 
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that "'[i]nformation gathering' . . . is 'a phase of tax 

administration procedure that occurs before assessment [or] 

collection,'" the Court explained that the Anti-Injunction Act 

would not bar a lawsuit challenging ordinary reporting 

requirements, even if those requirements "facilitate [the]

collection of taxes" by identifying taxpayers who owe tax, because 

reporting requirements are part of the information-gathering phase 

of tax administration. Id. (emphasis added) (quoting Direct Mktg., 

575 U.S. at 8, 12); see also id. at 1588-89 ("A reporting 

requirement is not a tax; and a suit brought to set aside such a 

rule is not one to enjoin a tax's assessment or collection. That 

is so even if the reporting rule will help the IRS bring in future 

tax revenue . . . .").

Appellant challenges the IRS's summons authority under 

26 U.S.C. §§ 7602 and 7609. As previously noted, § 7602 authorizes 

the IRS to issue summonses "[f]or the purpose of ascertaining the 

correctness of any return, making a return where none has been 

made, determining the liability of any person for any internal 

revenue tax or the liability at law or in equity of any 

identical language but applies to challenges to state tax laws. 

575 U.S. at 8. The Court "assume[d] that words used in both Acts 

are generally used in the same way," id., and subsequently adopted 

Direct Marketing's interpretation of "assessment" and "collection" 

activities as applied to the Anti-Injunction Act in CIC Services, 

see 141 S. Ct. at 1588-89 & n.1.
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transferee . . ., or collecting any such liability." 26 U.S.C. §

7602(a). Pursuant to this authority, the IRS may issue a summons:

(1) To examine any books, papers, records, or 

other data which may be relevant or material 

to such inquiry;

(2) To summon the person liable for tax or 

required to perform the act, or any officer or 

employee of such person, or any person having 

possession, custody, or care of books of 

account containing entries relating to the 

business of the person liable for tax or 

required to perform the act, or any other 

person the Secretary may deem proper, to 

appear before the Secretary at a time and 

place named in the summons and to produce such 

books, papers, records, or other data, and to 

give such testimony, under oath, as may be 

relevant or material to such inquiry; and

(3) To take such testimony of the person 

concerned, under oath, as may be relevant or 

material to such inquiry.

Id. These activities clearly fall within the category of 

information gathering, which the Supreme Court has distinguished 

from acts of assessment and collection. Compare Direct Mktg., 575 

U.S. at 8 (identifying the "reporting of information used to 

determine tax liability, including reports by third parties who do 

not owe the tax" as part of the "information gathering . . . phase 

of tax administration procedure that occurs before assessment

. . . or collection" (citation omitted)), with id. at 9 (defining 

"[a]ssessment" as "the official recording of a taxpayer's 

liability, which occurs after information relevant to the 

calculation of that liability is reported to the taxing 
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authority"), and id. at 10 (suggesting that "collection" begins 

after assessment when the tax collector "giv[es] notice to each 

person liable to pay any taxes . . . stating the amount of such 

taxes and demanding payment thereof"). Because appellant's suit 

challenges the IRS's information-gathering authority and the AntiInjunction Act limits our jurisdiction only in suits involving 

assessment and collection, the Act is not an applicable exception 

to the United States' waiver of sovereign immunity in 5 U.S.C. § 

702. See CIC Servs., 141 S. Ct. at 1588-89; Direct Mktg., 575 

U.S. at 14 ("[A] suit cannot be understood to 'restrain' the 

'assessment . . . or collection' of a [] tax if it merely inhibits 

those activities.").

Despite the seemingly clear demarcation between 

information gathering, on the one hand, and assessment and 

collection, on the other, the IRS insists that the purpose of 

appellant's suit is restraining the assessment or collection of 

taxes, thereby bringing it within the scope of the Anti-Injunction 

Act. Invoking language from CIC Services, the IRS contends that 

"'the substance of the suit' is directed at the alleged harm of 

having the IRS retain and use information about [appellant]'s 

virtual currency transactions for use in determining [his]

compliance with his income tax obligations," and "[t]he 'relief 

requested' is the expungement of information that would allow the 

IRS to do so." (Emphasis added.) See CIC Servs., 141 S. Ct. at 
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1589 ("In considering a 'suit['s] purpose,' [courts] inquire not 

into a taxpayer's subjective motive, but into the action's 

objective aim -- essentially, the relief the suit requests."). 

The IRS also cites out-of-circuit case law that predates both 

Direct Marketing and CIC Services to suggest that "suits 

challenging the IRS's investigatory processes leading up to 

assessment and collection are barred."

As the Court observed in CIC Services, however, "[t]he 

Anti-Injunction Act kicks in when the target of a requested 

injunction is a tax obligation -- or stated in the Act's language, 

when that injunction runs against the 'collection or assessment of 

[a] tax.'" Id. at 1590. Here, the target of the requested 

injunction is the IRS's continued retention of appellant's 

personal financial information, which appellant alleges the IRS 

acquired in violation of the Constitution and 26 U.S.C. 

§ 7609(f).13 Contrary to the IRS's suggestion that appellant's 

suit is "a 'preemptive' suit to foreclose tax liability" (which 

would be barred by the Anti-Injunction Act), this suit, like the 

suit at issue in CIC Services, "falls outside the Anti-Injunction 

Act because the injunction it requests does not run against a tax 

at all." Id. at 1593. Rather, "[t]he suit contests, and seeks 

13 The IRS itself appears to recognize this reality, as it 

describes the goal of the suit as seeking to "order[] the IRS to 

destroy information obtained pursuant to an enforcement order as 

part of a legitimate investigation." 
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relief from, a separate legal" wrong -- the allegedly unlawful 

acquisition and retention of appellant's financial records. Id. 

Like the plaintiff in CIC Services, appellant "stands nowhere near 

the cusp of tax liability," id. at 1591, and "the dispute is [not] 

about a tax rule," where "the sole recourse" in light of the AntiInjunction Act "is to pay the tax and seek a refund," id. at 1593. 

Consequently, the Anti-Injunction Act does not bar appellant's 

suit and the district court's judgment of dismissal under Federal 

Rule of Civil Procedure 12(b)(1) must be vacated. 

III.

The IRS urges that we should nevertheless affirm the 

dismissal of the case under Federal Rule of Civil Procedure 

12(b)(6) for failure to state a claim. Although the IRS made this 

argument below and both sides fully briefed the issue, the district 

court declined to evaluate the government's Rule 12(b)(6) 

arguments after concluding that dismissal was required under Rule 

12(b)(1). We therefore vacate the judgment of dismissal for lack 

of subject matter jurisdiction and remand to the district court to 

consider, in the first instance, whether appellant has stated a 

claim on which relief can be granted. See Town of Barnstable v. 

O'Connor, 786 F.3d 130, 141 (1st Cir. 2015).

So ordered.