Crypto, the IRS, and the Hidden Tax Storm Ahead with Janna Scott

As I talk with entrepreneurs and investors, I’m often struck by how many people underestimate the risks tied to crypto investing, especially when it comes to taxes. Right now, the IRS has slowed down audits, but that doesn’t mean the storm has passed. It’s just gathering strength. Today, I sit down with Janna Scott, founder of DeFi Tax , to pull back the curtain on what’s really happening with crypto tax reporting. Janna shares how she uncovered major flaws in widely-used tax software, why exchange statements can’t be trusted, and how compounded penalties can turn a small mistake into a devastating financial burden. What I love about Janna’s approach is that she not only sounds the alarm, she has built a blockchain-first solution that ensures accuracy, audit-readiness, and peace of mind. Whether you’ve dabbled in crypto, trade regularly, or run a business that accepts crypto payments, this conversation is your wake-up call to get prepared before the IRS comes knocking. Takeaways Popular crypto tax tools often produce wildly different results (35–120% variance). Exchanges disclaim responsibility for tax reporting errors, leaving investors liable. The IRS already has access to transaction data through John Doe summons. Penalties and compounding interest can double or triple liabilities over time. State tax authorities are often more aggressive than the IRS. Middle-class investors are the most vulnerable when audits restart. DeFi Tax uses blockchain data directly, providing audit-ready transparency. Having expert representation can mean the difference between resolution and ruin. Chapters 00:00 Introduction: Why crypto investors face unseen risks 04:12 How Janna discovered errors in crypto tax software 08:45 Why blockchain is the only reliable source of truth 15:30 The IRS admits flawed audits; but investors still pay 27:00 Compounding penalties and the impact on middle-class investors 38:50 State-level tax risks and aggressive enforcement 46:10 How DeFi Tax partners with CPAs and defends audits 53:39 Why crypto taxes (and the IRS) are here to stay 56:08 Final advice: don’t wait for the IRS storm to arrive About Janna Scott Janna Scott is a powerhouse in the world of crypto tax compliance and the founder of DeFi Tax. She has worked directly with the IRS and SEC, building DeFi Tax to bring clarity, automation, and audit-readiness to the chaos of crypto profit/loss reporting for tax purposes. Through her tax accounting services and her innovative AI/Blockchain application platform, Janna helps users stay ahead of shifting regulations and out of trouble with the IRS. 🔗 Learn more at defitax.us About Karen Rands I'm Karen Rands, founder of the Compassionate Capitalist Movement. I help entrepreneurs prepare to raise capital the smart way and guide investors in identifying startup opportunities that build wealth and make a difference. This show is your roadmap to funding success, from pitch deck to public offering. 📅 Want expert feedback on your pitch? Book a consult with me: bit.ly/KCHcalendar 🔗 Learn more: karenrands.co 🎧 Catch more episodes: thecompassionatecapitalistshow.com 📘 Free eBook: The 4 Ws of Crowdfund Investing: https://bit.ly/FreeCrowdfundInvestingBook 🎓 Join the Academy: bit.ly/CA-prelaunch