3 Things To Do if You Got an IRS Warning Letter About Your Crypto Activity

Yahoo

12-07-2025

If you're a cryptocurrency investor, you might soon hear from Uncle Sam in the form of an IRS letter detailing your tax obligations.
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The letters are designed to warn taxpayers that crypto investments they declared on their most recent tax returns might not be accurate, Fortune reported — and there are a lot more of those letters being issued.
In May and June alone, the number of support conversations on crypto tax platform CoinLedger that included the words 'IRS letters' totaled nearly 800. That represented a nine-fold increase compared to the same period in 2024, CoinLedger CEO David Kemmerer told Fortune.
'Thousands of investors are getting these,' Kemmerer said. 'Naturally, when that happens, we get a flood of customers coming to us being like, 'Hey, what do I do?''
The letters come in three basic forms, according to a recent blog from Corrigan Krause, an Ohio-based tax, accounting and consulting firm. One of them, titled letter 6173, is sent when the IRS believes you didn't meet your U.S. tax filing and reporting requirements for virtual currency transactions.
The others — letters 6174 and 6174-A — are sent when the IRS believes you have or have had 'one or more accounts containing virtual currency' but might not know the reporting requirements, Corrigan Krause noted.
You don't have to respond to a letter 6174 or 6174-A. However, you should check your form 1040 filing to determine if it needs to be amended. You should also keep an eye out for further IRS correspondence.
If you receive a letter 6173, you are required to act. Depending on the situation, here are three things you might need to do if you get a letter 6173, according to Corrigan Krause.
If you failed to file one or more income tax returns, you'll need to file delinquent returns and report your crypto transactions as soon as possible.
If you made a mistake on your income tax return, such as not reporting your crypto transactions or incorrectly calculating your income, gain or loss, then you should file an amended return as soon as possible.
If you think you met all your reporting requirements and have received a letter 6173 in error, you'll need to follow certain steps. First, check the top of the letter to find an address and eFax number that you'll need to send the following documentation to:
Your contact information.
A 'statement of facts' explaining your position. This should include a full history of previously reported income from your crypto transactions as well as an explanation of the actions you took to become compliant with U.S. reporting requirements. Provide copies of previously filed documents that confirm your compliance.
Your signed and dated letter 6173 section stating that you, under penalties of perjury, are sending the IRS documents proving you are compliant with U.S. reporting requirements.
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This article originally appeared on GOBankingRates.com: 3 Things To Do if You Got an IRS Warning Letter About Your Crypto Activity