Crypto taxpayers are in a nasty waking up.
We have been 16+ years in Bitcoin, yet taxpayers and CPAs still pretend that the tax guide remains unclear or even none. The IRS is preparing for a historical wave of compliance with the crypto space targets, and taxpayers have no idea what they are there.
Last year, the IRS released the income procedure 2024-28, initiating how crypto should be monitored from a tax view. Provides clear crystal guidance, safe Harbours for taxpayers to get the following, and deadlines to move. The policies are clear, the expectations set, along with the IRS quietly positioning themselves to issue a wave of compliance with auditing for those in their head in the sand.
Counting begins as we see an unprecedented value of 6174, 6174-A, and 6173 letters sent by the IRS.
Usually, the time of this year is quiet. But over the past few weeks, our phone has ringed no stopping from taxpayers receiving these notifications from the IRS demanding that they follow “or something else.” And not just us -crypto tax companies throughout the board report the same activity, indicating that the IRS knows that taxpayers are casually engaged in crypto tax prevention, and they are here to collect what they failed to collect in the last decade.
Rev-ProC’s strategic pairing 24-28 with the release of the new form 1099-da, the IRS has been positioned with blinding taxpayers and CPAs who neglected compliance. The 2025 tax year will be pivotal as the IRS now has an abundance of ammunition to be used in the audits. Lost days when taxpayers can postpone defenses like “good, the guide is unclear, so I just did my best.” The IRS is clear, the guide is clear, and the penalties for non -compliance are structured, but taxpayers and CPAs are still assumed to be in the wild west.
In this regard, Form 1099-DAS will be released to both taxpayers and the IRS alike with brokers, but there is a basic catch: the form does not include the cost basis for the 2025 tax year, and will almost certainly include the incorrect cost basis for the years thereafter.
This means when you move the property to an exchange and eventually sell them, the sale is reported – but the exchange has no idea what you originally paid for. In the absence of that information, the form defaults to displaying a $ 0 cost basis. In the IRS or a traditional CPA, it looks like pure income.
Say you buy 1 ETH for $ 2,200, move it to Coinbase, and sell it for $ 2,500. If the Coinbase has no cost basis, the form shows a $ 2,500 gain. Your actual gain is $ 300 – but unless you keep track of that basis on your own, the IRS don’t know. And they will assume the worst.
A broad problem
This is not a one-off scenario. This will affect the road -thousands of taxpayers.
If the killed gains are not disturbed, it will result in unnecessary tax debt or to undergo an auditing. And many CPAs will not be caught, as most are still not equipped to handle the crypto properly. They do not understand how the wallets work. They are confused by transferring sales. They miss staking rewards and full defi activities. Clients think their CPA is at the top of it. CPAs assume 1099 is accurate. No double check.
There things make mistakes. And that’s exactly what the IRS counts.
The old defense – whose guidance is unclear – will no longer hold. The IRS has become direct. Expectations are spelled. The time to fix things is now, before receiving an implementation letter.
Crypto is no longer some side cases. Thousands of millions of Americans bought, sell, staked, loans, or moved digital assets. Most have done a bad job maintenance record. Some have not been tested. The result is a tax system full of underreported obtained, misinformation, uneven filing, and the taxman seeking revenge.
The most common mistake is not complicated. Transfers between wallets are that -flag as sales. Assets will appear on exchanges with no attached basis. Staking rewards and airdrops are unnoticed. Defi activity is missing in full. And year -to -people, taxpayers and professionals rely on CSV exports that were never designed for tax reporting in the first place.
These are not side cases. They are broad among crypto investors. And on the scale, they add up to a compliance problem The IRS is now complete to pursue.
It is no longer about colored areas or technicality. It’s about a growing mismatch between how taxpayers think crypto taxes – and how the IRS expects them to handle. That space is where the risk lives, and in the established guide, the IRS will not get any blows.
