IRS Letter 6173: the one that requires a response

IRS Letter 6173 is the one virtual currency letter that requires a response. By the “respond by” date printed on the letter, you must either file delinquent returns, file amended returns, or mail a statement — signed under penalties of perjury — explaining why your filings are already complete.

What Letter 6173 is

Letter 6173 is one of three letters the IRS has sent in waves since 2019 concerning virtual currency and digital asset reporting. Its siblings, Letters 6174 and 6174-A, are educational notices that require nothing of you. Letter 6173 is different: it tells you the IRS believes you may not have met your filing or reporting obligations for digital assets, and it requires an answer.

The campaign began publicly in July 2019, when the IRS announced it was sending the three letters to more than 10,000 taxpayers and warned recipients to “take these letters very seriously.” The legal foundation is Notice 2014-21, which treats virtual currency as property — so sales, exchanges, and even spending crypto on goods or services are reportable dispositions. The IRS publishes the sample Letter 6173 (rev. 6-2019), and it repays close reading: everything below about deadlines, response options, and the sworn statement comes from its text. One reassurance the IRS itself offers about letters in this family: receiving one “isn’t an audit of your tax return or of your failure to file one” — it is a demand that you address the question before it becomes one.

The IRS crypto notices at a glance

Why it demands a response

A response to Letter 6173 is not optional, and it is not a formality. The letter sets a deadline — the one that governs is the deadline printed on your letter — and the response you submit is signed under penalties of perjury. That signature requirement changes the character of the exercise. Before you tell the IRS your filings are complete, you need to actually know that they are.

The signature line is the point: whatever you tell the IRS in response to a 6173, you are telling it under penalties of perjury.

The declaration the letter asks you to sign reads: “I, [name], declare under penalties of perjury that I have examined this entire document, including all attachments and accompanying statements, and that the enclosed is true, correct, and complete.” The letter adds that statements submitted this way “will be checked against information received from banks, financial advisors, and other sources for accuracy.” That is not boilerplate. Willfully signing a document under penalties of perjury that you do not believe to be true is a felony under 26 U.S.C. § 7206(1) — punishable by up to three years in prison and a $100,000 fine. The safe path is boring: reconstruct your records first, then sign only what they support.

Your options, conceptually

Broadly, taxpayers who receive a 6173 are in one of two positions:

• Your filings are complete and accurate. The letter provides a procedure for saying so. You respond by the deadline, following that procedure — after verifying, against your own records, that the statement you are signing is true.
• They aren’t — or you’re not sure. Then this letter is the moment to get current. That can mean filing returns you never filed or correcting ones you did. Sorting out which path fits is exactly why many taxpayers engage a qualified tax professional when a 6173 arrives.

The letter itself narrows those two positions into three concrete response options.

1. File the delinquent returns

If you never filed for a year with virtual currency activity, the letter directs you to file the missing returns and report the transactions “as soon as possible.” Write “Letter 6173” at the top of the first page of each delinquent return, mail the original to the address given in the letter for return processing, and include a copy of the return with your response. Today’s reporting mechanics — the digital asset question, Form 8949, and broker statements — are laid out on the IRS’s digital assets page and in our unreported crypto guide.

2. File amended returns

If you filed but the return was wrong — transactions left off, or income, gain, or loss miscalculated — the fix is Form 1040-X, Amended U.S. Individual Income Tax Return. The IRS accepts Form 1040-X electronically for the current and two prior tax periods; older years go on paper. The same notation applies: “Letter 6173” at the top of the first page. Interest on any underpayment runs from the original due date until you pay, under 26 U.S.C. § 6601 — so paying with the amendment stops the meter.

3. Certify that you are already compliant

If you believe you met every filing and reporting requirement, the letter tells you to mail or eFax a package to the address or eFax number printed at its top, containing:

• a statement of facts explaining your position, including a complete history of previously reported income from your virtual currency transactions, the actions you took to become compliant, and copies of previously filed documents confirming it;
• your contact information — telephone number, complete address, and mailing address if different; and
• the letter’s declaration, signed and dated, under penalties of perjury.

Two mechanical notes from the letter’s own text: the eFax line has a 10 MB limit, and original or amended returns must never be sent by eFax — originals go by mail to the processing address in the letter, with copies in your response package.

A response outline that covers what the letter asks for

There is no required format for the compliance statement, but a response that maps one-to-one onto the letter’s requests is harder to misread. A workable outline:

1. Heading. Your name, taxpayer identification number, the letter date, the tax years at issue, and “Response to Letter 6173.”
2. Statement of facts. Which exchanges and wallets you used, what happened in each year, and where each item was reported — return, schedule, and form.
3. Reporting history, year by year. A short table of each year’s reported virtual currency income, gain, or loss and the form it appeared on.
4. Exhibits. Copies — never originals — of the filed returns, Forms 8949, and any broker or exchange statements that corroborate the history.
5. Contact information. Phone, complete address, mailing address if different.
6. The declaration. The letter’s penalties-of-perjury statement, signed and dated.
7. Representation, if any. A completed Form 2848, Power of Attorney, if a professional is responding for you.

What correcting actually costs: a worked example

Suppose you filed your 2023 return but left off crypto sales: $30,000 in proceeds against $12,000 of basis, an $18,000 long-term gain. If a 15 percent capital gains rate applies, the amendment adds $2,700 of tax. If the IRS asserts the 20 percent accuracy-related penalty of 26 U.S.C. § 6662, that is another $540. Interest accrues on the underpayment from April 2024 until the day you pay. Real money — but bounded, and it shrinks the longer version of this story where the same $18,000 surfaces in an examination instead, with the government choosing the timing and the penalty posture.

Deadlines, extensions, and representation

The date that controls everything is the “respond by” date printed at the top of your letter. If you cannot assemble a complete response in time, the letter’s procedure is specific: mail a written request for a 30-day extension to the address on the letter before the respond-by date passes. Do not treat the deadline as soft while you gather records — the extension request is the mechanism for buying time. The letter also carries a hotline number for questions (the sample commits the IRS to returning messages within three business days), and if you want a professional to handle the response, a completed Form 2848 goes in with it.

If you ignore it: how it escalates

The letter states the consequence plainly: if the IRS does not hear from you by the respond-by date, “we may refer your tax account for examination,” and underpayments remain subject to interest and penalties. The penalty menu is not theoretical. Failure to file runs 5 percent of the unpaid tax per month up to 25 percent, and failure to pay 0.5 percent per month up to 25 percent, under 26 U.S.C. § 6651. The accuracy-related penalty is 20 percent of the underpayment; the civil fraud penalty of 26 U.S.C. § 6663 is 75 percent. And the clock works against silence: the IRS generally has three years to assess tax, six years where more than 25 percent of gross income was omitted — and no time limit at all for a fraudulent return or a year you never filed, under 26 U.S.C. § 6501. An unfiled year stays open forever; filing is what starts the statute running.

If the problem is bigger than a missed form

For the most serious situations — conduct that was willful rather than sloppy — the IRS’s general Voluntary Disclosure Practice uses Form 14457, which the IRS revised in 2022 with an expanded section for reporting virtual currency. That program is for taxpayers with genuine criminal exposure; for garden-variety unreported crypto without willfulness, ordinary delinquent or amended filings are usually the path — our unreported crypto guide walks through the difference. Sorting out which side of that line you are on is, again, why many taxpayers engage a qualified tax professional when a 6173 arrives.

What not to do

Do not ignore it. Letters 6174 and 6174-A can be read, absorbed, and acted on quietly; Letter 6173 cannot. It requires a response by its deadline, and an unanswered required response does not make the inquiry go away. The other mistake is the opposite one: signing a response you haven’t verified. Under penalties of perjury, “I assume I’m fine” is not a position — check first.

A few smaller traps, straight from the letter’s mechanics: do not eFax original or amended returns (the letter forbids it — originals go by mail, copies in the response); do not send original documents as exhibits; and do not let the deadline lapse in silence because your records aren’t ready — mail the 30-day extension request instead. A late, complete, verified response beats a fast, sworn guess every time.

The policy question underneath

Whether taxpayers who want to come forward on digital assets should have a clearer, more standardized path is an active policy debate. Our affiliate, Digital Asset Tax Advocacy, has taken a position on legislation in this area; you can read about its work on its section of this website. This page, like everything we publish, is educational only.

Common questions

Last reviewed July 30, 2026 · Reviewed by Andrew Gordon, JD, CPA

This page is educational and does not constitute tax or legal advice for your specific situation. For questions about your own filings, consult a qualified tax professional.