Cryptotaxaudit's Donnelly says IRS Letter 6174 campaign targets crypto taxpayers

Key points

• Cryptotaxaudit CEO Clinton Donnelly says dozens of people, including the firm's clients, have contacted it after receiving Letter 6174 notices.
• Donnelly said in the past six weeks that the IRS sends the letters at roughly 10,000 a month to people it knows have had crypto transactions.
• Ripple board member Joel Schwartz said he received one and threw it away, calling it a reminder to follow the law.

The IRS is sending Letter 6174 notices to crypto taxpayers in what Cryptotaxaudit's chief executive calls an alarming campaign, Bitcoin.com News reports. Clinton Donnelly said dozens of people, including the firm's own clients, have contacted it after receiving the notices, and that the volume is no longer a handful of isolated cases.

Donnelly said the letters are voluntary compliance notices: the agency holds information about a recipient's crypto activity and wants them to check whether their reporting was correct. He said the IRS sends them at roughly 10,000 a month to people it knows have had cryptocurrency transactions, and that the agency treats them as educational.

No reply required

Letter 6174 was first sent to taxpayers in 2019. It tells recipients the IRS may not know their reporting duties for virtual currency transactions and asks them to file amended or delinquent returns, without citing specific inconsistencies. Donnelly advised against rushing to amend a return before understanding your position, noting the letters generally need no direct reply.

Some recipients have dismissed the notices. Joel Schwartz, a member of Ripple's board of directors, said he received one a few days ago and threw it away, describing it as a reminder to follow the law. Donnelly stressed that getting a letter does not mean the taxpayer has done anything wrong.

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