Nudge Letters

Definition ∞ Nudge letters are communications from tax authorities or regulatory bodies designed to prompt individuals or entities to comply with specific obligations. These letters often serve as a warning or reminder, suggesting that the recipient’s activities may be under review or require attention. They aim to encourage voluntary compliance without immediate punitive action. Such correspondence seeks to alter behavior through subtle influence.
Context ∞ Nudge letters have become a notable tool used by tax authorities globally to address non-compliance in digital asset reporting. News frequently reports on jurisdictions issuing these letters to cryptocurrency holders suspected of undeclared gains or unreported transactions. These communications signal increased scrutiny from tax bodies and pressure individuals to reconcile their crypto activities with tax laws. They represent a softer approach to enforcement before more severe penalties are applied.