Bitcoin holders under IRS scrutiny as thousands have received warning letters

Thousands of Bitcoin holders across the US are finding the hard way the IRS is watching carefully without saying a word.

According to Coinledger, there has been a 758% surge in people raising these crypto warning letters through support chat over the past 60 days, with cryptocurrency tax companies supporting the same trend.

Currently, these warnings are not all the same, but they are landing quickly in the mailbox, with the most common being the letter 6174.

However, there is also a 6174-A. This quietly suggests that something could turn off. Then the ramp up. Letter 6173 has a request for a response. And CP2000? That’s something the IRS has already decided what you owe, and you’ll only have 30 days to reply or face anything that comes next.

The IRS casts a wide range of nets

Many people reportedly are everyday traders who thought they had done everything right. They never even made a taxable move.

However, the IRS has collected data from Coinbase, Poloniex and other exchanges through John Doe summons, and appears to be using that information to confirm filings. Ben Yoder, customer success manager at Coinledger, told Cryptopolitan:

He added that the common problem is fear of small mistakes made several years ago, like users who forgot to report hundreds of dollars in 2021, and now they are afraid to get an audit. It’s not about what’s always missing, but the way the IRS calculates it. Transfers from wallet to wallet are a big problem.

If you are buying Bitcoin on one platform, you go to a cold wallet and sell it later in a second exchange, that second platform doesn’t know the original cost. It may report a zero cost base, and the IRS believes your sales as profit, even if they were profitable. That’s how people who submitted correctly are still flagging.

Ben said, “We’ve seen wallet-to-wallet transfers are a major cause of confusion. Many users are unaware that these transfers are not taxable, but failing to maintain proper records can lead to tax reporting issues.”

So, the lack of documentation ruins the way profits are calculated, even though the movement itself does not create tax events.

New 1099-DA Forms Promote More IRS Letters

This whole situation only gets worse. In 2026, Crypto Exchange will begin submitting Form 1099-DA to both users and the IRS. The form shows profits and losses. If people don’t report the same income that appears in 1099-DA, Coinledger says they’re likely to get hit with the CP2000.

“The IRS is more visible than ever for crypto, but even submissive investors can accidentally flag them if they don’t have accurate cost-based data,” said David Kemmerer, CEO of Coinledger. He said this was just the beginning and people need to start straightening the records right now.

If you get one of these letters and know that your return is solid, don’t panic. You can fight it. But you need proof. That means screenshots, transaction history, 1099S, something that shows what you actually paid. Respond to the IRS using documents to back up the numbers.

Crypto tax tools like Coinledger can help you draw all your transactions and transfers from different wallets and exchanges to one place, allowing you to see the big picture.

People are also asking why they are receiving letters at all. They are particularly confused about what’s going on during the Trump administration. But nothing has changed yet. President Donald Trump had the idea of ​​making our based codes tax-free, but that hasn’t passed through Congress. Currently, the IRS still taxes cryptos like stocks and uses all of its weapons to implement it.

For those who have noticed that they missed something with their past returns, there are still ways to fix it. You can submit revisions using Form 1040X. The IRS is usually more tolerant if you are moving forward. If you are making major changes, include a short note to explain what you have revised to avoid future questions.

For employment help, it depends on letters. If you get a CP2000 or 6173, it’s probably wise to get a Crypto Tax Pro. These letters take a higher risk, especially if you have disagreements about how much you owe. For non-active characters like 6174 or 6174-A, it might be okay to use a tool like Coinledger to double-check the gain and fix something.