A Notice Wave, Not a Single Case
Crypto taxpayers are reporting a new round of IRS letters. Clinton Donnelly, CEO of Cryptotaxaudit, says the volume is larger than the isolated cases firms used to see. He wrote on social media that dozens of people, including clients of his firm, have contacted the company after receiving Letter 6174 notices. Donnelly called the wave alarming. The notices are not new. The IRS first sent them in 2019. They tell taxpayers the agency has information that they have or had virtual currency accounts. The letter also says the person may not know the reporting rules for crypto and other virtual currencies.
What Letter 6174 Means
Donnelly describes Letter 6174 as a voluntary compliance letter. In simple terms, the IRS has some data about a person’s crypto activity. It wants the recipient to check whether past tax returns reported that activity correctly. Receiving the letter does not mean the taxpayer did anything wrong. That point matters. Donnelly says people should not rush to amend returns or send information to the IRS before they understand their position. The letter generally does not require a direct response, he added, but recipients should read the instructions carefully. Earlier, Donnelly said the IRS appeared to send the notices at roughly 10,000 a month to people with known crypto transactions. He called it educational at the time. Now he sees more pressure behind the campaign, though he still says the letters are not proof of a problem.
Some Recipients Ignore the Mail
Not everyone is worried. Joel Schwartz, CTO Emeritus and a member of Ripple’s Board of Directors, said he received one of the letters a few days ago. He disregarded it. In his view, it was basically a reminder to follow the law. Other users on X also said they had received a notice. The mixed reactions show the challenge for taxpayers. A letter can be a routine nudge or a sign that the IRS has questions. The difference depends on each person’s trading history, reporting record, and records. For crypto users, the practical move is to keep good records and review any notice before responding. Donnelly’s warning is less about panic and more about patience. Understand the letter first. Then decide what action, if any, is needed.
