Catenaa, July 08, 2025-The IRS is launching a sweeping crackdown on cryptocurrency tax compliance following the rollout of new rules under Revenue Procedure 2024-28, sparking fears of a “crypto tax bomb” among investors and accountants, reports said.
According to Justin Zanardi, CPA and general manager at CountOnSheep.com, the agency has begun issuing thousands of warning letters to crypto users and is preparing for historic levels of audits.
The new regulations clarify tracking requirements and eliminate ambiguity that many taxpayers and CPAs have relied on for years.
Paired with the introduction of Form 1099-DA, which brokers must now file with the IRS and users, the rules mark a turning point in federal enforcement.
However, the form’s failure to report cost basis means many users may appear to owe much more in taxes than they actually do, unless they’ve maintained their own records.
A widespread issue arises when assets moved between wallets or exchanges are misinterpreted as sales, or when staking rewards and DeFi earnings are unreported.
Without accurate tracking, transactions could show inflated gains, leading to erroneous tax bills or audit triggers.
Zanardi warned that CPAs still lag in understanding crypto-specific transactions, which amplifies the problem.
The IRS now holds the upper hand, with defined expectations and enforcement tools, targeting what it sees as years of underreported crypto income.
Experts are urging immediate taxpayer action to reconcile records and avoid falling into audit traps under the IRS’s strengthened regime.
