Letter 6174 is the gentlest piece of mail the IRS has ever sent a crypto holder. It does not demand money. It does not set a deadline. It ends with a bolded line: “You do not need to respond to this letter.”

People read that line and relax. I understand why. But the letter opens with a different sentence, and that one matters more: “We have information that you have or had one or more accounts containing virtual currency.” The IRS is telling you, in writing, that your name is attached to an account it knows about. Everything else in the letter is context.

This guide walks through what Letter 6174 actually says, what it does not say, and why the smart move is to treat it as a free warning rather than a form letter you can toss.

What Letter 6174 says, line by line

The published version of the letter is Letter 6174 (Rev. 6-2019), Catalog Number 72273Z, and you can read the template on irs.gov. It lists “Form 1040” as the tax form and is titled “Reporting Virtual Currency Transactions.”

The “why we’re writing” paragraph says the IRS has information that you have or had virtual currency accounts “but may not know the requirements for reporting transactions involving virtual currency.” That framing is deliberate. Letter 6174 is the version the IRS uses when it is not yet accusing you of anything. The Internal Revenue Manual calls it the “Virtual Currency Education” letter. See IRM 21.3.1.8.5.1.

The “what you need to do” paragraph is where the teeth are. It says that if you believe you did not accurately report your virtual currency transactions, you should file amended returns, or delinquent returns if you did not file at all. Then it adds: “If you do not accurately report your virtual currency transactions, you may be subject to future civil and criminal enforcement activity.”

Read that twice. An education letter that mentions criminal enforcement is not an invitation to ignore it.

The rest of the letter is a short tax lesson. It repeats the rule from Notice 2014-21 that virtual currency is property for federal tax purposes. It explains that trading one virtual currency for another, such as Bitcoin for Ether, is a reportable exchange. It says the reporting obligation applies whether the account is in the U.S. or abroad. And it says you must report virtual currency transactions “regardless of whether you received a payee statement for the transaction.”

That last point is the one people miss. The absence of a Form 1099 never excused the reporting. The letter says so in plain English.

Where the IRS got your name

The IRS announced these letters in News Release IR-2019-132 on July 26, 2019. It said more than 10,000 taxpayers would receive one of the three versions by the end of August 2019, and that the names “were obtained through various ongoing IRS compliance efforts.” The release did not say which efforts.

What we do know from court records is that the IRS had, by then, already enforced a John Doe summons against Coinbase for customer records covering 2013 through 2015. The First Circuit described that history in Harper v. Werfel, a case brought by a taxpayer who received one of these letters and alleged it was tied to the Coinbase summons. The court did not decide where every letter came from, and neither will I. The point is narrower: the IRS had third-party exchange data, and it used letters to put taxpayers on notice.

If you want the mechanics of how the IRS gets records for people it cannot yet name, read how a John Doe summons works.

Why “no response required” is not the same as “nothing to do”

Letter 6174 does not start a deadline. It is not a notice of deficiency, it is not a bill, and it is not an audit. If your returns were right, you can file it with your tax records and move on.

If your returns were not right, the letter changes your position in three ways.

  • It ends the “I didn’t know” defense. The IRS fraud handbook lists IR-2019-132 among the notices IRS personnel should consider when deciding whether a taxpayer can show reasonable cause. See IRM 25.1.2.11.2. A letter mailed to you personally is stronger evidence of notice than a press release.
  • It is in your file. The IRS knows it sent you the letter. If an examiner later opens your return, the letter is part of the history, and silence after notice reads very differently from an honest mistake.
  • It tells you the IRS can match. Whatever data put your name on the mailing list can be compared against what you reported.

None of that means you are in trouble. It means the window for fixing things on your own terms is open now, and it will not stay open forever.

What to do after a Letter 6174

Here is the order I work in when a client brings one of these in.

First, pull every year the letter could touch. The 6174 template does not list tax years. Its sister letter, Letter 6173, refers to tax years 2013 through 2017. Your exposure depends on your own activity, so gather exchange exports, wallet histories and the returns you filed for each year you held or traded crypto.

Second, compare what you reported to what actually happened. Sales, swaps, crypto spent on purchases, mining and staking income, and crypto received as pay all count. The letter itself points to Schedule D for dispositions, Schedule C for crypto received as an independent contractor, and Schedule E for supplemental income received in virtual currency.

Third, decide whether any year needs correcting. If a year was wrong, the letter tells you how the IRS wants it done: an amended return, with “Letter 6174” written at the top of the first page, mailed to Internal Revenue Service, 2970 Market Street, Philadelphia, PA 19104. The IRM confirms that amended returns responding to these letters are centralized at the Philadelphia campus. See IRM 21.3.1.8.5.1.

Fourth, think about the size of the problem before you file anything. A small basis error is a different case from years of unreported trading. If the unreported amounts are large, or if anything about the history looks like concealment, talk to a lawyer before you sign an amended return. An amended return is signed under penalties of perjury, and IRC 7206(1) makes it a felony to willfully sign a return you do not believe is true and correct as to every material matter. Get it right the first time.

The statute of limitations angle

People ask whether old years even matter. Sometimes they do not. The general rule in IRC 6501(a) gives the IRS three years after a return is filed to assess more tax.

But there are exceptions, and crypto cases hit them. If you omitted more than 25 percent of the gross income stated on the return, IRC 6501(e) stretches the period to six years. If you never filed a return, IRC 6501(c)(3) says the tax can be assessed at any time. If the return was false or fraudulent with intent to evade, IRC 6501(c)(1) removes the limit entirely. I cover this in detail in how far back the IRS can audit crypto.

So the honest answer is: an old year may be closed, or it may be wide open. You need to know which before you decide what to do.

Letter 6174 versus its two siblings

Letter 6174 has two siblings. Letter 6174-A is the “education-plus” version; it says you may not have properly reported, and it warns that the IRS may send other correspondence about potential enforcement. Letter 6173 is the serious one; it has a respond-by date and asks for either corrected returns or a signed statement under penalties of perjury.

If you are not sure which one you have, look at the bottom right corner of each page for the letter number. Then read the side-by-side comparison. If yours is a 6173, start with the existing Letter 6173 guide and the deadline on the first page.

Do not get fooled by the copycats

Real IRS letters do not ask you to register your wallet on a website. The IRS digital assets page has warned about scam letters with QR codes that claim to be from the IRS and ask people to sign up on a “compliance portal.” The genuine Letter 6174 asks for nothing. It points you to irs.gov for forms and gives you a hotline number to leave a message.

If a letter asks for your seed phrase, a payment in crypto, or a login, it is not from the IRS. Full stop.

The bottom line

Letter 6174 is the IRS clearing its throat. It costs you nothing to listen. Review your crypto years, fix what is wrong while fixing is still voluntary, and keep the letter with your tax records so you can show what you did after you received it.

If what you find is bigger than a rounding error, call before you file anything. The reality is usually much more manageable than the nightmare in your head, but only if the first move is the right one. For a broader look at how the firm handles crypto matters, see the cryptocurrency tax page on getirshelp.com.