IRS Study Reveals 92.5% Americans Don’t Report Crypto Sales

The research paper is titled “Who Reports Cryptocurrency to the IRS?” IRS SOI Division researchers Jeffrey Hoopes, Tyler Menzer, and Jaron Wilde authored the study. It analyzed over 1.3 billion tax returns filed between 2013 and 2021.

The result: just 17.4 million individuals, roughly 6.5% of observed taxpayers, reported crypto sales during that period.

The Numbers Paint a Stark Picture

By 2021, more than 6.5 million tax returns included crypto sales. That sounds like progress, but independent surveys estimate 31 to 54 million Americans own crypto. As a result, only 32% to 56% of actual owners appear to be reporting.

Early adoption years were even worse. Between 2013 and 2015, fewer than 1,000 people per year reported crypto earnings in some estimates. Even as trading volumes exploded, crypto tax reporting lagged far behind.

A 2022 Barclays analysis already suggested crypto investors were paying less than half the taxes they owed. This new IRS study backs that up with federal data.

Who Reports Crypto Taxes and Who Doesn’t

The study also profiled crypto tax reporters. They tend to be younger, with the average age dropping to around 34 by 2021. They also earn less taxable income than the general population.

Their trading patterns resemble retail-style behavior. These reporters show more meme-stock-like activity and less tax planning around holding periods. In short, many are casual traders, not institutional players.

Reporting jumped sharply after the IRS added a virtual currency checkbox to Form 1040 in 2019. Self-prepared returns showed the biggest spike. That suggests the checkbox nudged individual filers to comply.

A $50 Billion Revenue Gap

The IRS estimates that unreported digital assets cost the agency over $50 billion per year. That figure sits within the broader $688 billion annual tax gap. So as crypto adoption grows, the potential lost revenue grows too.

On-chain data consistently shows transaction volumes that dwarf IRS-reported figures. The study acknowledges this gap. It reinforces the conclusion that most crypto activity stays invisible to tax authorities.

Because this study used pre-2025 data, it does not capture the new Form 1099-DA rules. Starting this tax year, brokers must report gross proceeds from crypto sales directly to the IRS.

Crypto Tax Reporting Is Low Worldwide

The compliance gap is not unique to the United States. According to the Divly Global Cryptocurrency Taxation Report 2026, only about 1.76% of crypto owners worldwide declare their holdings. That works out to roughly 5.3 million declarants against 301 million owners.

Japan leads with a 19.78% compliance rate. Norway follows at 14.63%, then Germany at 7.71% and the UK at 7.33%. Meanwhile, the U.S. sits at 5.13% under Divly’s methodology.

Country-specific studies reveal even steeper noncompliance. In Norway, roughly 88% of crypto holders do not report. Similarly, Denmark and other Nordic jurisdictions show over 90% noncompliance in targeted analyses.

IRS Enforcement Is Accelerating

Form 1099-DA is the biggest enforcement shift yet. Starting this tax year, crypto brokers must report gross proceeds from every sale to both the taxpayer and the IRS. This mirrors how stock brokers already report trades via Form 1099-B.

The IRS has also ramped up blockchain analytics partnerships with firms like Chainalysis. It has served John Doe summonses to major exchanges. AI-driven matching now helps flag mismatches between reported income and on-chain activity.

Penalties range from civil fines to criminal charges for willful evasion. The first “pure tax” crypto prosecutions occurred in 2024 and 2025. Some of those cases involved millions in unreported gains.

Global Frameworks Are Tightening Too

The OECD’s Crypto-Asset Reporting Framework (CARF) and the EU’s DAC8 directive target this gap. Together, they will enable automatic information exchange across 40-plus countries starting around 2027.

The UK’s HMRC has already sent thousands of “nudge” letters to suspected crypto holders. Japan, Norway, and Germany also leverage domestic exchange data more aggressively than most.

A 2026 Coinbase and CoinTracker survey of 3,000 U.S. crypto users is also telling. While 74% now know crypto is taxable, 61% remain unaware of the new Form 1099-DA rules. That knowledge gap could trigger compliance issues this filing season.

What Comes Next for Crypto Tax Reporting

The compliance window is narrowing. Form 1099-DA now generates broker reports, so the IRS will have data to match against returns at scale for the first time.

Today’s April 15 deadline marks a turning point. Crypto investors who have not been reporting face a choice: come into compliance now, or wait for the IRS to come to them.

This article is for informational purposes only and does not constitute financial or tax advice. Consult a qualified tax professional for guidance on your specific situation.