IRS Floods Crypto Investors with Warning Letters Amid 2025 Tax Crackdown

Edward M Francis
Jun 29
3 min read

Key Highlights

IRS goes after crypto investors with a wave of warning letters
As crypto booms government scrutiny is intensify

The crypto market may be booming, but for many U.S. investors, there’s another surge that’s grabbing their attention and it's coming from the IRS.

According to Fortune, thousands of crypto investors have received warning letters from the Internal Revenue Service (IRS), raising concerns that their tax filings on digital assets may not be accurate.

According to several crypto tax experts, the volume of these notices has jumped sharply compared to previous years.

Spike in IRS Letters Prompts Panic Among Crypto Users

At CoinLedger, a leading crypto tax platform, the trend is unmistakable. From May through June 2025, the company saw nearly 800 customer support inquiries that included the phrase “IRS letters”

This is a ninefold increase from the same period in 2024.

“Thousands of investors are getting these,”

said David Kemmerer, CEO and cofounder of CoinLedger.

“Naturally, when that happens, we get a flood of customers coming to us being like, ‘Hey, what do I do?’”

And it’s not just support teams feeling the pressure. Crypto tax attorneys are also seeing a surge in consultations. Jordan Bass, a crypto-focused tax attorney and CPA, said his firm had received at least 10 inquiries about these letters in the last two monthsup from zero last year.

“We’re getting at least a couple calls a week,”

added Andrew Gordon, another tax attorney who specializes in digital asset taxation.

“We haven’t seen this level of IRS activity since 2020.”

What’s in the Letters?

There appear to be three versions of these IRS notices making the rounds:

Informational Letters : These suggest the IRS has data showing the recipient held one or more accounts containing virtual currency. The letter asks the taxpayer to review their filings but doesn’t require a reply.

Compliance Letters : Similar to the first, these gently remind recipients to check their crypto reporting. Again, no direct response is required.

Demand Letters : These are the most serious. Taxpayers are told to submit amended tax returns, new returns, or a written explanation defending their original crypto-related filings.

So far, there is no clear explanation as to why the IRS has intensified its letter campaign in 2025, but experts are beginning to notice patterns.

Poloniex Users Under the Microscope?

According to Gordon, many of the recent letter recipients appear to have had accounts on Poloniex, a cryptocurrency exchange that was once U.S.-based but has since shifted operations overseas.

Whether this is a coincidence or part of a targeted effort by the IRS remains unclear. But it suggests the agency may be working with exchange-sourced data to verify or challenge taxpayer claims.

This wouldn’t be the first time the IRS used exchange records to go after crypto investors. In 2017, the agency famously forced Coinbase to hand over customer data. That court order led to a wave of compliance letters in 2019 and 2020.

Why This Matters

Crypto investors should not ignore these warnings. The IRS has made it clear that crypto gains are taxable whether from trading, staking, airdrops, or even NFT flips. And with blockchain analysis tools improving, it's getting harder to fly under the radar.

Receiving a letter doesn’t automatically mean an audit is coming. But failing to respond when required especially to the third type of letter could escalate the situation quickly.

What Should You Do if You Receive One?;

Don’t panic but take it seriously; Read the letter carefully to determine whether a response is required. Additionally, review your past returns, especially your crypto transactions.

Consult a qualified crypto tax expert or attorney, particularly if you used less common exchanges like Poloniex. Finally, avoid amending returns on your own if you’re unsure; mistakes can make things worse.

Crypto Profits Bring Tax Scrutiny

As Bitcoin and digital assets continue to climb in value, so too does government scrutiny. The latest IRS letter wave is a reminder that crypto isn't a lawless frontier and profits made under the radar will eventually come under the spotlight.

Investors hoping to ride the next bull run should make sure their tax house is in order because this time, the IRS is watching more closely than ever.