IRS Expands Mass Mailings of Letter 6174 Tax Notices to Crypto Investors
Summary
- The Internal Revenue Service (IRS) is expanding distribution of Letter 6174 notices to virtual-asset investors.
- The notice is increasingly taking on the character of a measure that pressures recipients to reconfirm their tax filing obligations tied to virtual-asset transactions.
- CEO Clinton Donnelly said recipients should not rush to file an amended return and should first get an accurate understanding of their tax situation.
Forecast Trend Report by Period
The Internal Revenue Service is expanding mailings of notices to cryptocurrency investors urging them 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 is 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 by the agency. It advises recipients to confirm whether income from past crypto transactions was properly reported. Receiving the letter alone does not mean a tax violation has been established.
Donnelly previously said mailings of the notice had increased over the past six weeks. At the time, he said the IRS was sending about 10,000 letters a month to taxpayers with records of crypto transactions and described the effort as educational. More recently, however, he said the broader distribution appears to be putting more pressure on recipients to review past filings.
The IRS has been sending Letter 6174 to taxpayers with cryptocurrency holdings or transaction records since 2019. The document says recipients may not fully understand their tax obligations related to crypto trading. It instructs them to file amended or delinquent returns if omissions are found, but does not specify any concrete violation.
Donnelly said receiving the notice does not mean taxpayers need to rush into filing an amended return. "You should not hastily amend a tax return or submit materials 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 appeared on X in recent days. Joel Schwartz, Ripple's honorary chief technology officer and a board member, said he had received the mailing a few days earlier. He said he threw the document away, calling it essentially a reminder to comply with the law.
