Bitcoin and other digital assets are expected to yield historic profits for both investors and the tax collector. Over the past two months, the Internal Revenue Service has delivered a flurry of warning letters to American cryptocurrency investors over their interests in digital assets. Crypto tax specialists said the number of letters warning about inaccurate crypto investments reported on recent tax returns could increase over the past year.
The number of individuals inquiring about government announcements has increased on CoinLedger, a cryptocurrency tax site. The tax website’s founders and CEO, David Kemmerer, told that between May and June, CoinLedger had almost 800 support chats that used the term “IRS letters,” a nine-fold increase over the same period in 2024.
According to him, thousands of investors are receiving these. They receive a swarm of clients who ask them, “Hey, what do I do?” when that occurs.
There has also been a surge in questions over the letters, according to two crypto tax lawyers. Over the last two months, at least ten recipients have contacted his company, according to Jordan Bass, an accountant and crypto tax lawyer. This contrasts with 2024, when his office received no inquiries.
Attorney Andrew Gordon, who focuses in crypto tax law, also reported seeing a rise. He stated, “We receive at least a few calls every week.”
The three cryptocurrency tax specialists claimed that since the IRS began sending out so many letters in 2020 and 2021, they haven’t noticed such a spike in crypto-related queries. In 2017, a court order resulted in the IRS obtaining thousands of client information from Coinbase, a cryptocurrency exchange in the United States. After two years, the tax service created a series of “voluntary compliance” letters tailored to cryptocurrency and sent them to investors.
Crypto owners are informed in the notices that the IRS has information indicating that it has “one or more accounts containing virtual currency.” Investors are simply advised to verify that they have accurately disclosed their cryptocurrency transactions to the IRS in two different versions of the letter. Responses from recipients are not necessary.
However, in a third kind of IRS letter, the receivers are told to reply to the IRS with either modified or new tax forms, or a justification for their belief that they have properly reported their cryptocurrency transactions to the US government.
The two cryptocurrency tax lawyers and the CEO of CoinLedger were unsure of the reason for the increased number of investors contacting them regarding IRS notices in 2025 compared to previous years. Gordon, one of the tax lawyers, saw that recent beneficiaries were related by having accounts on the cryptocurrency exchange Poloniex.
CoinLedger CEO Kemmerer reiterated Gordon, saying that when the IRS has obtained some data, they usually conduct more outreach to cryptocurrency investors.
A request for comment from the IRS was not immediately answered. “I’m sure they just pick people at random, and the lucky ones get these scary letters,” Kemmerer continued.
