IRS Cracks Down on Crypto Investors with Surge in Warning Letters

758% Spike in Notices Leaves Everyday Investors Shocked

Hang onto your hats, crypto fans! The IRS is coming down hard, with a whopping 758% increase in warning letters sent to U.S. crypto investors over the last two months. That's right, folks, CoinLedger spilled the beans, and the numbers are staggering.

And it's not just CoinLedger sounding the alarm. Accounting firms like Taxing Cryptocurrency are also feeling the heat, according to CoinLedger's big boss, David Kemmerer. He spilled the tea to The Block, confirming this wild spike in IRS action.

But here's the kicker: many of the folks getting these letters are your average Joes and Janes, totally blindsided by the IRS knocking on their digital doors. Ben Yoder from CoinLedger says these everyday investors are "shocked" to get these notices, even though they thought they did everything right on their taxes. The confusion? It's all about those wallet-to-wallet transfers and missing cost basis data. Turns out, even if you're not dodging taxes, these issues can still set off the IRS's alarms.

So, what kind of letters are we talking about? The most common is IRS Notice 6174, which is basically a friendly "heads up" from Uncle Sam. But watch out, because if you get a 6173 or CP2000, you better buckle up. These bad boys can lead to audits and might need a response ASAP.

Kemmerer's got a warning for us: this might just be the beginning of a full-blown enforcement blitz, especially with the new Form 1099-DA rules looming on the horizon. Starting in 2026, crypto brokers will have to spill all the beans on gain/loss data, and you know the IRS will be all over that like a kid on a candy bar.

Now, former President Donald Trump's been talking a big game about getting rid of crypto taxes, but let's be real—no such law exists. Crypto guru Adam Cochran had a good laugh at the idea of an executive order making that happen, pointing out that any tax reform would need the thumbs-up from both the House and Senate.

But hold up, Trump did pull the plug on an IRS rule that would've made DeFi platforms jump through even more hoops. That move went down in April, and it's got everyone in the crypto world talking.

With the IRS turning up the heat, CoinLedger's got some sage advice for investors: keep your records tight, stay on top of those taxable events, and if you get one of those scary IRS notices, don't be afraid to call in the pros.