Q01What types of IRS notices do you handle for crypto?
We handle CP2000 and CP2501 underreporter matters, Letters 6173, 6174, and 6174-A, examination notices, and collections notices involving digital assets.
Q02How quickly do I need to respond to an IRS notice?
The deadline is printed on the notice and varies by notice type. Review it immediately so records can be gathered and a complete response prepared before the deadline.
Q03Can you get penalties reduced or removed?
Penalty abatement may be available through reasonable cause, first-time abatement, or other statutory provisions. Eligibility depends on the facts and supporting documentation.
Q04What happens if I get selected for a full audit?
With a valid Form 2848, we can represent you before the IRS, organize the supporting records, handle correspondence, and attend meetings within the scope of our authorization.
Q05Should I consider voluntary disclosure if I have unreported crypto?
That decision depends on the amount, years involved, conduct, and whether the IRS has already contacted you. We evaluate the available compliance paths before recommending a response.
Q06Will the IRS always accept the cost basis I reconstruct after receiving a notice?
Not automatically. Reconstructed basis should be supported by blockchain records, exchange histories, pricing data, and transfer documentation that explains how each figure was calculated.
Q07Should I respond to an IRS crypto notice before gathering all of my records?
Review the notice immediately, but a substantive response should generally address the issue with complete supporting documentation when the deadline allows. An incomplete response can make resolution harder.
Q08Does a CP2000 mean I am being audited?
No. A CP2000 is an automated underreporter notice proposing changes because third-party information does not match the return. It is not a formal audit notice. You should still respond by the deadline because an unresolved CP2000 can lead to a statutory notice of deficiency.
Q09Can a CPA represent me in a crypto tax audit?
Yes. A CPA who is eligible to practice before the IRS can represent you within the authority granted on Form 2848. The CPA can communicate with the examiner, organize records, prepare explanations, and attend meetings, while some documents may still require your signature.
Q10What penalties apply to unreported crypto?
The result depends on why the income or gain was omitted. Tax, interest, and an accuracy-related penalty may apply, and late filing or late payment penalties may also apply. More serious conduct can carry additional civil or criminal consequences. Penalty relief depends on the facts, filing history, and supporting evidence.
Q11How long does a crypto IRS notice take to resolve?
There is no fixed resolution time. A documented information-matching response may take several months, while an examination involving missing records, multiple tax years, or disputed positions can take longer. The immediate priority is preserving the response and appeal deadlines even when the IRS review continues beyond them.
