IRS Targets Crypto Users With Wave of Notices — Here’s How to Protect Yourself
The taxman cometh—with a vengeance. The IRS is cracking down on crypto holders, flooding inboxes and mailboxes with compliance notices. If you’ve traded, mined, or even just held digital assets, you’re in the crosshairs.
Why now? The agency’s beefed-up crypto enforcement division isn’t playing nice. After years of playing catch-up, they’ve got the tools—and the political backing—to hunt unreported gains.
Paperwork grenades: These aren’t your grandma’s audit letters. We’re talking CP2000 notices (translation: ‘we think you owe money’) and even John Doe summonses to exchanges. The message? ‘We know you’re out there.’
Defense playbook: Document every transaction like it’s evidence in your future court case. Lost records? Time to pay for that crypto tax software you’ve been avoiding. And maybe—just maybe—stop treating DeFi like your personal offshore account.
The irony? Wall Street still gets away with darker tricks before lunch. But hey, ‘decentralization’ makes for an easier target.
Crypto Tax Experts Report Surge in IRS Letter Inquiries Since May
CoinLedger, a popular platform that helps users file crypto taxes, reported nearly 800 support queries mentioning “IRS letters” between May and June. That is roughly nine times the number it saw during the same period in 2024.
Crypto tax attorneys are also seeing a sharp rise in outreach. Jordan Bass, an accountant and attorney, said his firm received at least 10 inquiries in the last two months. The year before, he saw none. Another lawyer, Andrew Gordon, said his office is now fielding several such calls each week.
This uptick is reminiscent of previous IRS crackdowns. In 2020 and 2021, the agency sent out a wave of compliance letters after securing data from major exchanges like Coinbase. That campaign followed a 2017 court order compelling Coinbase to hand over thousands of customer records.
Poloniex Link Suspected as IRS Letters Target Past Users
The latest letters vary in tone and urgency. Two versions advise recipients to review whether they properly reported crypto transactions. They do not require a response. A third version is more direct, instructing investors to submit new or amended returns or explain why their existing filings are accurate.
Though it remains unclear what triggered the latest round, some suspect a LINK to Poloniex. Gordon and Kemmerer noted that many recent letter recipients had accounts with the exchange. That could suggest the IRS obtained new transaction data, though the agency has not confirmed this.
I’m sure there’s just people randomly getting selected, and the lucky ones get these scary letters,” CoinLedger’s CEO David Kemmerer, noting that outreach typically increases after such access.
Under US law, crypto investors must report all taxable transactions. This includes selling or swapping coins, receiving income from staking or mining, and even gifts above certain thresholds. Losses can be claimed too, but failing to declare gains can carry stiff penalties.
