Summary

  • The U.S. Internal Revenue Service (IRS) is expanding the mailing of Letter 6174, which informs cryptocurrency investors of their tax-filing obligations.
  • Clinton Donnelly, CEO of CryptoTaxAudit, said the IRS is sending about 10,000 notices a month to taxpayers with records of cryptocurrency transactions, and said the campaign has recently taken on a stronger tone of pressure to review past filings.
  • Donnelly said Letter 6174 and 6174-A do not require immediate amended filings, but advised recipients to review the guidance carefully and avoid hastily revising tax returns or submitting materials to the IRS.

Forecast Trend Report by Period

The Internal Revenue Service is expanding its use of notices that tell cryptocurrency investors to review their tax-filing obligations.

Bitcoin.com reported on November 9 that inquiries from taxpayers who recently received the IRS's Letter 6174 have surged, citing Clinton Donnelly, chief executive officer of crypto tax firm CryptoTaxAudit. In a post on X, Donnelly wrote that the issue was no longer limited to isolated cases and that dozens of people, including his clients, had contacted him after receiving the notice.

Letter 6174 is an IRS notice sent to taxpayers whose cryptocurrency transaction history has been identified. It advises recipients to check whether income from past crypto trades was properly reported. Receiving the notice alone does not mean a tax violation has been established.

Donnelly previously said distribution of the notice had increased over the past six weeks. At the time, he said the IRS was sending about 10,000 notices a month to taxpayers with records of cryptocurrency transactions and described the effort as educational. More recently, he said the broader mailing campaign appears to be putting greater pressure on recipients to revisit past filings.

The IRS has been sending Letter 6174 since 2019 to taxpayers with a history of holding or trading cryptocurrency. The notice says recipients may not fully understand their tax obligations related to crypto transactions. If missing reporting is identified, it directs them to file an amended return or a delinquent tax return. It does not specify any particular violation.

Donnelly emphasized that receiving the notice does not mean taxpayers should immediately amend prior returns. "You should not rush to amend a tax return or submit documents to the IRS before fully understanding your tax situation," he wrote. "Letter 6174 and 6174-A generally do not require a direct response, but the guidance should be reviewed carefully."

Posts from users saying they received the IRS notice have also been appearing on X. Joel Schwartz, Ripple's honorary chief technology officer and a board member, said a few days ago that he had received the mailing as well. He said he discarded the document, calling it essentially a reminder to comply with the law.

Suehyeon Lee