Key Takeaways
- The IRS is sending a massive wave of Letter 6174 notices to pressure crypto users on tax compliance.
- The notices alert taxpayers that the IRS knows of their crypto activity and seeks accurate returns.
- Experts advise against rushing to amend filings, as the letters are reminders, not proof of guilt.
Cryptotaxaudit CEO Alerts of Massive IRS Campaign Against Crypto Taxpayers
The Internal Revenue Service (IRS) is targeting cryptocurrency taxpayers in a massive push, and crypto tax executives are alarmed by the ongoing campaign’s size.
Clinton Donnelly, CEO of Cryptotaxaudit, a company that offers crypto tax returns, crypto gain calculations, and forensic crypto analysis services, reported a growing crypto taxpayer-focused campaign using Letter 6174 notices.
On social media, Donnelly described the surge as “alarming,” revealing that dozens of people, including the firm’s own clients, have contacted the company after receiving notices.
“This is no longer an isolated handful of cases,” he stressed. Donnelly explained that Letter 6174 notices were voluntary compliance letters, meaning that the IRS has information about your crypto activity and wants you to review whether you have met your tax reporting duties.
Before, Donnelly detected a rise in these letters in the past six weeks, calling it “a vague scare.”
“They send these letters out at roughly the rate of 10,000 a month, and they send them to people that they know have had cryptocurrency transactions. And it’s simply educational. That’s how the IRS looks at it. It’s an educational letter,” he assessed at that time.
But now, he acknowledges that the IRS might be pressuring crypto payers, as it has before, to review past filings and take corrective action. Still, he clarified that receiving one of these letters was not indicative of wrongdoing.
“Threw It Right in the Trash”
First sent to taxpayers in 2019, Letter 6174 notices state that the IRS has “information that you have or had one or more accounts containing virtual currency but may not know the requirements for reporting transactions involving virtual currency, which include cryptocurrency and non-crypto virtual currencies.”
At the same time, the letter calls for filing amended returns or delinquent returns after failing to file them for one or more taxable years, without pointing to specific inconsistencies.
“DO NOT rush into amending tax returns or sending information to the IRS without understanding your position first. Letters 6174 and 6174-A generally do not require a direct response, but you should review the instructions carefully,” Donnelly concluded.
Multiple respondents on X said they had recently received one of the letters. Joel Schwartz, CTO Emeritus and member of Ripple’s Board of Directors, said he got one in the mail a few days ago, but disregarded it.
“Threw it right in the trash,” Schwartz posted. “It’s basically just a reminder to follow the law.”
Bill Gates Microsoft Copilot AI Predicts a SOL Crypto Explosion
No Comment! Be the first one.