IRS Crypto Letters Spike Over 750% as Enforcement Wave Looms

The U.S. Internal Revenue Service has intensified its scrutiny of cryptocurrency investors, with warning letters surging by 758% in the past 60 days. CoinLedger, a crypto tax software provider, reports that everyday investors are increasingly receiving notices—often to their surprise—even when they believe their filings are accurate.

Confusion frequently arises from wallet-to-wallet transfers and incomplete cost basis data, triggering IRS alerts regardless of intent to evade taxes. The most common notice, IRS 6174, serves as an educational tool, while more severe letters like 6173 and CP2000 demand responses and may lead to audits.

CoinLedger CEO David Kemmerer suggests this uptick could foreshadow broader enforcement ahead of FORM 1099-DA rules, set to take effect in 2026. These regulations will mandate crypto brokers to report detailed gain and loss data, significantly tightening compliance requirements.

Despite former President Donald Trump's vocal support for eliminating crypto taxes, no legislative changes have materialized. Analyst Adam Cochran recently dismissed the notion of an executive order bypassing Congress, emphasizing that tax reforms require bicameral approval. Notably, TRUMP did repeal an IRS proposal to classify DeFi platforms as brokers earlier this year.