Letters 6173, 6174, 6174-A, CP2000, CP2501
Received an IRS letter about crypto? Each one has a different deadline, and the wrong response is worse than none.
These letters are generated from exchange data, Form 1099-DA, and summons returns. Some require a signed response by a deadline; some propose tax on your entire sale proceeds because no cost basis was reported; some are warnings ahead of enforcement. We pull your IRS transcripts to see exactly what the IRS has, reconcile the years in question under attorney-client privilege, and respond on your behalf.
Why the response should come from an attorney
The response is a statement to the IRS. Letter 6173 is answered under penalty of perjury; a CP2000 response commits you to a position. An attorney prepares it with the record in view.
What you tell us stays privileged. Reconstructing unreported years reveals what was missed and when; done under an attorney’s engagement, that work is protected. Done with a preparer, it may not be.
We have done this since 2014. The firm’s crypto practice began when an Ethereum developer needed help in 2014, and it is led by a tax attorney and CPA. We accept BTC and ETH for fees.
IRS crypto letter response | Skokie, Illinois and nationwide
What the letter means, and what the IRS already has
Before you respond, know what the IRS is working from. A CP2000 or CP2501 shows the forms it matched against your return; a 6173 or 6174 usually follows a summons or broker data covering specific years. Your wage and income transcript lists every form the IRS received, including 1099-DA, 1099-B, and 1099-MISC from each exchange. We start there, then reconcile the years so the response corrects the IRS’s numbers rather than accepting them.
Where to start
The letters, one by one
Ignoring a letter leads to a notice of deficiency and, eventually, assessment and collection. Responding without the records leads to agreeing to tax you may not owe. Here is what each letter is and what it requires.
The IRS has forms that do not match your return and is asking you to explain or amend. No tax amount yet. This is the cheapest point to fix a reporting gap: a reconciliation or an amended return usually closes it. Responding to CP2501
Generated by automated matching, with proposed tax, interest, and usually a 20 percent accuracy penalty, and 30 days to respond. For crypto the proposed tax is often wrong because the broker form carried proceeds without basis. The response is a reconciled Form 8949 with support, not a check. Responding to CP2000
The one crypto letter that demands an answer by a stated date, under penalty of perjury: file or amend, or explain why your filings are correct. It usually means the IRS has specifics from a summons or broker data. Engage counsel before the deadline; the response is prepared from a full reconciliation. Letter 6173
No deadline and no required response, but a clear signal that the IRS has your name from an exchange or a summons. Correcting prior years before an audit opens generally produces lower penalties than waiting, and the correction can be prepared under privilege. Letter 6174-A
Letters 2205 and 566 open an examination, and crypto audits now often include the Historical Digital Asset Form, which asks for every wallet and exchange you have controlled. At that point the matter is an audit, with a power of attorney and counsel handling the examiner. Crypto audit defense
If a crypto assessment has already happened, the notices escalate from CP14 to CP504 to Letter 1058 or LT11, which starts the 30-day window before a levy. The right response depends on whether the assessment was correct; if not, there are ways back, and if so, there are arrangements the IRS accepts. Tax debt resolution
The attorneys who handle IRS letters
Every response is prepared by an attorney, under privilege, from your IRS transcripts.
Andrew Gordon
MANAGING PARTNER
