The IRS is turning its attention back to cryptocurrency holders in 2025. One way they’re doing it is by sending out IRS Letter 6174-A, which we first saw back in 2019.
If you’ve received this letter, you’re not alone. Thousands of crypto investors are getting notices like this as part of the IRS’s renewed focus on digital asset compliance.
What is IRS Letter 6174-A?
IRS Letter 6174-A is one of three “soft notices” the IRS sends to taxpayers who may have failed to properly report their cryptocurrency transactions. These letters are informational, but they serve as a serious reminder: the IRS is actively monitoring crypto activity, and they expect accurate reporting.
Unlike IRS Letter 6173, Letter 6174-A does not require a response. However, that doesn’t mean you should ignore it.
Here’s what the letter typically says:
- It informs you that the IRS is aware you may have participated in virtual currency transactions.
- It reminds you of your tax obligations for those transactions.
- It encourages you to review your tax filings and amend past returns if necessary.
Why Did You Receive This Letter?
IRS Letter 6174-A states, “We have information that you have or had one or more accounts containing virtual currency but may not have properly reported your transactions involving virtual currency, which include cryptocurrency and non-crypto virtual currencies.”
In other words, the IRS knows you have digital assets, and you need to make sure they’re reported correctly on your taxes.
The IRS has been collecting information from crypto exchanges, payment processors, and blockchain analysis tools for years. If you received IRS Letter 6174-A, it’s likely because:
- You’ve used a U.S.-based crypto exchange like Coinbase, Kraken, Robinhood, or Binance US
- Some of your crypto transactions were reported to the IRS via Form 1099-MISC or Form 1099-B
- The IRS flagged your account through third-party data matching
Even if you believe you’ve reported everything correctly, receiving this letter means your crypto activity is now on the IRS’s radar. Since cryptocurrency taxes are notoriously difficult to calculate, it’s worth checking your past returns for accuracy.
What Should You Do Next?
While IRS Letter 6174-A doesn’t demand an immediate response, it’s important to take action. If there is a problem with your digital asset tax reporting, it’s much easier to resolve it now, before an audit begins or tax debt is assessed.
With early action, you may be able to escape penalties, avoid an IRS audit, and negotiate tax debt. Here’s what you should do:
- Review Your Past Returns
Double-check that you properly reported all crypto income for the tax year(s) listed on your letter, including: - Correct Any Mistakes
If you discover that you’ve underreported or failed to report crypto transactions, filing an amended return can help you avoid more serious consequences later. - Explore Tax Debt Resolution
Don’t panic if you owe money. There are many ways to manage tax debt, including IRS payment plans and even negotiating with the IRS. - Get Professional Advice
Navigating crypto taxes isn’t easy, especially with changing regulations and IRS scrutiny. Speaking with an experienced cryptocurrency tax attorney can help you understand your options—and protect you from potential audits or penalties.
Pro Tip: If you have the slightest concern about criminal tax charges, call our attorneys at (847) 580-1279 right away to discuss your options.
What Happens If You Ignore IRS Letter 6174-A?
While 6174-A doesn’t have the same urgency as other IRS notices, ignoring it can be risky. If the IRS believes you’re not in compliance, they may escalate enforcement, including:
- Sending more aggressive notices, like Letter 6173 or Notice CP2000
- Launching a tax audit of your crypto income
- Imposing penalties for underreporting income, including the 20% accuracy-related penalty or 75% civil fraud penalty
- Garnishing wages or seizing your property if tax debt is assessed and remains unpaid after several notices
Need Help Responding to Letter 6174-A?
Receiving IRS Letter 6174-A doesn’t mean you’re in trouble, but it’s a clear sign you need to take your crypto tax reporting seriously. If there’s any chance your crypto activity wasn’t reported accurately, now is the time to get ahead of it.
Since 2014, Gordon Law has helped hundreds of investors navigate complex crypto tax issues. If you’ve received this letter, we can help you do the same. With an experienced attorney on your side, you can face the IRS with clarity, confidence, and a game plan to make any outstanding issues go away once and for all.
Schedule a confidential consultation to review your filings and make sure you’re protected before the IRS takes further action.
