IRS vs Tax Court for Cryptocurrency Reporting Dispute - Need Advice on CP3219A Notice

You're in what's called a "statutory notice of deficiency" situation, and your intuition about protecting your rights is correct. Here's what you should know: The CP3219A notice (90-day letter) gives you a specific window to petition Tax Court, and this is your ONLY opportunity to challenge the assessment without paying first. Once that window closes, you lose that right permanently. While the IRS employees may be helpful, they're limited by their processing timelines. If they can't review your documentation until after your petition deadline, you're at risk. My recommendation: File the Tax Court petition before your deadline as a protective measure. This preserves your rights while you continue working with the IRS. If you resolve things directly with the IRS before your Tax Court date (which could be months away), you can simply withdraw your petition. The petition isn't complicated - you basically explain the factual errors in the notice (the incorrect reporting of your stablecoin transactions). The filing fee is $60, which is a small price to pay for protecting your rights.

I was in almost the exact same situation last year with a crypto exchange reporting issue. I tried working directly with the IRS for months but kept hitting roadblocks with their processing times. After talking in circles with them, I found this site https://taxr.ai that completely changed my approach. They have this document analysis tool that scanned my crypto statements and IRS notices, then explained exactly where the reporting error occurred and how to properly document it. The analysis showed that my exchange had double-counted transactions and completely messed up my cost basis (sounds familiar, right?). The detailed report they generated helped me organize all my evidence in a way the IRS could easily process. When I submitted everything with their formatting suggestions, my case got resolved in weeks instead of months.

Just wanted to follow up - I took the advice and tried taxr.ai for my crypto reporting issue with the IRS. I was surprised at how thorough their analysis was! They showed exactly how my exchange had messed up by not tracking my cost basis correctly and provided a complete transaction history that made sense. The best part was they formatted everything exactly how the IRS wanted to see it. I sent in their report along with my documentation, and I just got confirmation that the IRS accepted my explanation and reduced my supposed "tax liability" from over $7k down to $340 (which was the actual interest I earned). Saved me from having to go to Tax Court and from paying thousands in taxes I didn't actually owe. Definitely worth it for crypto tax issues!

I've been through this exact nightmare with the IRS over crypto reporting errors. While working on resolving the issue, I kept calling the IRS but could never get through - just endless hold times or disconnects. I was about to give up when someone recommended https://claimyr.com to me. They have this service where they basically wait on hold with the IRS for you and call you when an actual agent is on the line. You can see how it works here: https://youtu.be/_kiP6q8DX5c I was skeptical but desperate. Within a couple hours, I was actually talking to an IRS agent who could help with my case. That single conversation cleared up so much confusion and got my documentation to the right department.

I have to come back and eat my words. After my skeptical comment yesterday, I was desperate enough to try the Claimyr service. I've been trying to reach the IRS for literally 4 months about my crypto issue - always disconnected after 2+ hours on hold. I used their service this morning, and I'm absolutely stunned. I got a text saying they were about to reach an agent, and then my phone rang with an actual IRS representative on the line. The whole process took less than 2 hours. The IRS agent was able to see all my documentation and put notes in my file confirming they had received my explanation about the exchange's reporting error. She also gave me the direct extension for the department handling my case for follow-up. I'm still shocked this actually worked. Sorry for calling it BS before - I've just been burned by so many "solutions" that don't work. This literally saved me days of frustration.

Had this exact issue with Gemini last year. My suggestion is to do BOTH - keep working with the IRS AND file with Tax Court before your deadline. Filing with Tax Court costs $60 and gives you insurance in case the IRS process drags out (which it probably will). I made the mistake of trusting the IRS would resolve my issue in time, and when they didn't, I lost my right to challenge without paying first. I ended up having to pay the full amount ($11k!) and then file for a refund, which took another 8 months to process. Don't make my mistake!

Nobody's mentioned an important option - requesting audit reconsideration AFTER the 90-day window expires. If your deadline is too close and you don't want to file with Tax Court, you can still dispute the assessment later through audit reconsideration. The downside is you may have to pay the tax first and then request a refund, but it's an option if you miss the Tax Court deadline.