IRS Notices · Crypto

IRS Letter 6173 (Crypto): What It Means, Your Deadline, and What to Do (2025)

By Angeline Balsitis, EA · Reviewed by Melissa Ly, Chief Tax Officer · Updated September 12, 2025 · Editorial Standards

Why you got IRS Letter 6173

Letter 6173 is part of an IRS campaign that started in 2019, when the agency obtained records from cryptocurrency exchanges and began matching names to tax returns. If your name showed up as someone who held or traded digital assets — but your returns don't reflect that activity — the IRS sends one of three letters. Letter 6173 is the one that means business.

The IRS isn't accusing you of a crime. It's telling you that its records and your tax filings don't line up, and it wants you to fix that before it digs deeper. The official announcement of these letters is on the IRS site at IRS letters to virtual currency owners, and the rules for reporting crypto live on the IRS digital assets page.

Letter 6173 vs. 6174 vs. 6174-A

People mix these up, so here's the difference in plain terms:

• Letter 6174 — a soft educational reminder. No response needed.
• Letter 6174-A — a stronger warning that the IRS may take future enforcement action. Still no response required.
• Letter 6173 — the serious one. The IRS believes you may not have filed or fully reported, and it demands a signed response by a specific date.

If you're holding a 6173, you're holding the version that can't be ignored. The signature line matters: your response is made under penalty of perjury, just like a tax return.

What happens if you ignore it

Crypto cases don't quietly disappear, because the IRS already has third-party data tying your name to digital asset accounts. Here's the typical path if Letter 6173 goes unanswered:

1. Missed response date — your file is flagged as non-responsive.
2. Referral for examination — the IRS opens an audit of your crypto and possibly your wider return. You'll get exam letters requesting records.
3. Proposed assessment — the IRS calculates tax on the unreported gains, often in its favor, plus penalties and interest. This can arrive as a CP2000 underreporter notice or a formal audit report.
4. Accuracy or fraud penalties — a 20% accuracy-related penalty is common; deliberate concealment can lead to far worse. Interest runs on everything until paid.

The lesson isn't fear — it's timing. Responding on the front end, even to say "I already reported this," keeps you in the cheapest, calmest part of the process.

Your options for responding to Letter 6173

Which path fits depends on whether you actually owe anything:

• You already reported your crypto correctly. Send a signed statement explaining that, with the returns and records that back it up. No amendment needed.
• You missed some transactions. File amended returns (Form 1040-X) for the affected years to add the gains, losses, or income. Our walkthrough on amending a return explains the moving parts.
• You never filed for one or more of those years. File the missing returns. Coming forward on your own is almost always better than waiting to be examined — see filing old returns voluntarily.
• You agree you owe but can't pay it all. A payment plan, hardship status, or — depending on your situation — other relief programs may apply. Don't let a balance stop you from responding on time; the response and the payment are separate steps.

Reconstructing crypto gains is the hard part. You need cost basis (what you paid) and proceeds (what you sold for) across every exchange and wallet. If your records are messy, exchange transaction histories and on-chain data can usually fill the gaps.

How to respond to Letter 6173, step by step

1. Find the response date printed on the letter and put it on your calendar. Everything works backward from that day.
2. Pull your crypto history — download transaction reports from every exchange and wallet you used during the years in question. A surprise 1099 you weren't expecting from an exchange is often the trigger.
3. Compare it to your filed returns. Did you report the sales, swaps, staking, and other income? If yes, gather the proof. If no, list what's missing.
4. File or amend the affected returns to add anything you left off, or prepare your signed statement if you already complied.
5. Write the response under penalty of perjury — honestly and completely. A false statement here is a far bigger problem than the unpaid tax itself.
6. Send it by the deadline, keep copies of everything, and use a mailing method that proves delivery.
7. If the numbers are large or you have multiple unfiled years, get a professional review first. The order you fix things in — returns, then penalties, then the balance — changes what you ultimately pay.

If at any point the IRS process feels stuck or unfair, the independent Taxpayer Advocate Service can help — but they're a backstop, not your first move. Responding on time is.

Letter 6173 questions, answered

This guide is general information, not tax or legal advice for your specific situation. Eligibility for IRS programs depends on individual facts and circumstances; no outcome is guaranteed.

Related: CP2000 underreporter notice · filing old returns voluntarily · amending a return to fix a tax debt — or browse all guides.