The IRS is stepping up its cryptocurrency enforcement game. A letter we haven’t seen in years is back: IRS Letter 6173.
For the last 10 years, the crypto tax attorneys at Gordon Law have been in the trenches fighting the IRS. We’ve defended over a dozen crypto audits and helped many people respond to IRS Letter 6173. Here is what you need to know about this letter.
What is IRS Letter 6173?
IRS Letter 6173 is a warning letter pertaining to cryptocurrency taxes. It states, “We have information that you have or had one or more accounts containing virtual currency and may not have met your U.S. tax filing and reporting requirements for transactions involving virtual currency, which include cryptocurrency and non-crypto virtual currencies.”
Tax attorney and CPA Andrew Gordon, Partner at Gordon Law, says, “This is essentially the IRS saying: ‘We think you underreported your crypto activity. Fix it, or we might audit you.’”
This letter is serious and demands a response. Ignoring it isn’t an option.
I received Letter 6173. What should I do?
If you receive Letter 6173, the IRS has flagged discrepancies in your tax filings related to crypto. Most likely, they received a tax form from one of your cryptocurrency tax exchanges, and your tax returns don’t match the information reported. If you don’t respond to this notice, you’ll be at high risk of a tax audit.
Many people feel overwhelmed by IRS notices and simply avoid dealing with them—but IRS problems don’t go away on their own. You need to act fast to avoid an audit, reduce penalties, and negotiate any tax owed.
Look for key information
Before you do anything, check the following information on IRS notice 6173:
- Tax year(s) under review
- Deadline to respond
What to do if you haven’t reported crypto on your taxes
If you have not reported crypto on your taxes (including all years and all exchanges or income sources), you should first call a tax attorney who’s experienced with cryptocurrency. Depending on your situation, you could be at risk of a criminal tax investigation. It’s important to understand your rights and your options before sending any information to the IRS.
In most cases, we can resolve the issue by amending the tax returns in question, avoiding an audit altogether.
If you owe additional tax, you’ll still have time before the IRS begins the collections process. There are several options available to mitigate or even reduce tax debt:
Our experienced tax attorneys have saved crypto investors millions in taxes and penalties. Don’t wait until it’s too late—reach out now to avoid an audit!
What to do if you have reported crypto on your taxes
Cryptocurrency taxes are extremely complicated, so even if you did report digital assets on your taxes, there could be errors on your return. Common mistakes include:
- Treating staking rewards or mining rewards as non-taxable until they’re sold.
- Not applying capital gains tax to cryptocurrency swaps or conversions.
- Leaving some crypto exchanges or income sources off your tax return.
- Using an unsupported cost basis method, such as HIFO.
Keep in mind, most tax professionals don’t even understand cryptocurrency unless they focus on this area. We’re not kidding when we say it’s complicated! If you’re unsure about the accuracy of your tax returns, give our team a call at (847) 580-1279 to discuss your case.
However, if you believe your returns are correct, simply respond to the notice with all supporting documentation—including Form 8949 detailing all sales and dispositions of digital assets—and a statement of facts.
Your IRS notice contains details of how to respond. If you still have questions, we’re here to help.
Can I respond to the 6173 notice without an attorney?
You don’t need to hire an attorney for your 6173 letter response, but crypto tax law is complex. The best move is to work with a pro who understands both cryptocurrency and tax resolution. Time is of the essence, but the right professional can:
- Extend your response deadline
- Fix reporting errors
- Defend your case if you’re selected for an audit
“Crypto tax enforcement is a top priority for the government,” says Gordon. “With tools like blockchain analysis, the IRS has unprecedented visibility into crypto transactions. Ignoring compliance is riskier than ever.”
Helpful information about crypto tax reporting
The regulatory landscape surrounding digital assets is evolving rapidly. Here are some resources to help you understand your tax obligations:
- How Is Crypto Taxed? IRS Rules and How to Report
- Form 1099-DA for Digital Assets: Comprehensive Guide and Latest Updates
- Red Alert: Why You Need to Fix Your Crypto Taxes Right Now
Need help with your response?
If you receive Letter 6173 or are worried about your crypto tax compliance, don’t wait for the IRS to escalate the situation with an audit or investigation.
Over the past 10 years, our team at Gordon Law has:
- Prepared more than 1,500 crypto tax reports
- Helped hundreds of people respond to notices like this 6173 letter
- Defended over a dozen crypto tax audits
- Saved crypto investors millions in taxes and penalties
Give our crypto tax attorneys a call today. We’ll guide you through the process, defend your rights, and work to minimize the damage.
