The Problem
Our client was assessed over $1 million by the IRS for alleged unreported cryptocurrency transactions. The assessment included substantial accuracy-related penalties under IRC §6662(a) and arrived with one of the most serious enforcement notices the IRS can issue: a Notice of Intent to Levy. At that point, the IRS had the legal authority to begin seizing assets.

The taxpayer maintained that the reporting errors were not intentional and stemmed from reliance on a CPA who incorrectly handled the cryptocurrency reporting.

Our Strategy
After being retained, DeWitt Law immediately took steps to stop enforced collection and put the client back in control:

  • Filed a Collection Due Process (CDP) request to halt levy action and preserve the client’s appeal rights

  • Conducted a detailed collections analysis to evaluate the client’s true ability to pay and long-term exposure

  • Prepared and submitted a formal penalty abatement claim, arguing that the §6662(a) penalties were inappropriate due to reasonable cause and good-faith reliance on a tax professional

We built a record demonstrating that the taxpayer acted responsibly, relied on qualified professional advice, and did not engage in willful misconduct.

The Problem
Our client was assessed over $1 million by the IRS for alleged unreported cryptocurrency transactions. The assessment included substantial accuracy-related penalties under IRC §6662(a) and arrived with one of the most serious enforcement notices the IRS can issue: a Notice of Intent to Levy. At that point, the IRS had the legal authority to begin seizing assets.

The taxpayer maintained that the reporting errors were not intentional and stemmed from reliance on a CPA who incorrectly handled the cryptocurrency reporting.

Our Strategy
After being retained, DeWitt Law immediately took steps to stop enforced collection and put the client back in control:

  • Filed a Collection Due Process (CDP) request to halt levy action and preserve the client’s appeal rights

  • Conducted a detailed collections analysis to evaluate the client’s true ability to pay and long-term exposure

  • Prepared and submitted a formal penalty abatement claim with the IRS, arguing that the §6662(a) penalties were inappropriate due to reasonable cause and good-faith reliance on a tax professional

We built a record demonstrating that the taxpayer acted responsibly, relied on qualified professional advice, and did not engage in willful misconduct.

The Result
The case was successfully resolved with:

  • An IRS payment plan tailored to the client’s financial reality

  • Full abatement of the §6662(a) penalty, totaling $523,825.26

By eliminating more than half a million dollars in penalties, we dramatically reduced the client’s overall tax burden and avoided aggressive IRS enforcement.

Why This Matters
Cryptocurrency cases often trigger automated IRS assessments and severe penalties, even when taxpayers act in good faith. This case demonstrates that large crypto penalties are not always final and that experienced representation can make the difference between financial devastation and a manageable resolution.

If you’ve received an IRS notice involving cryptocurrency, penalties, or collection action, early intervention matters.