IRS Letters 6174 and 6174-A: no response required — now what?

IRS Letters 6174 and 6174-A require no response — both say so in bold. They are educational notices telling you the IRS has information that you hold or held virtual currency accounts. The right move is a self-audit: pull your records, rebuild your cost basis, and amend past returns only if you find an error.

What these letters are

Letters 6174 and 6174-A are educational “soft notices” about virtual currency and digital asset reporting, sent by the IRS in waves since 2019. Neither one requires a response. Neither one sets a deadline. They exist to inform: digital asset transactions have tax consequences, and taxpayers who have them should make sure their returns reflect them.

That places them in a different category from Letter 6173, which requires a signed response by the deadline printed on the letter. If you are not sure which letter you have, check the number in the top-right corner — our IRS letters overview walks through all of them.

The program dates to July 2019, when the IRS announced it had begun sending letters to taxpayers with virtual currency transactions — more than 10,000 recipients expected by the end of that August. The IRS’s own summary of the three variants is admirably compact: Letter 6174, “may have duty to report; no response required.” Letter 6174-A, “may have reporting error; no response required.” Letter 6173, “response under penalties of perjury.” All three rest on the same legal foundation: Notice 2014-21, which holds that virtual currency is treated as property for federal tax purposes — so selling it, exchanging it, or spending it is a reportable disposition.

6174 versus 6174-A, line by line

The difference between the two variants is emphasis. Letter 6174-A is the firmer of the pair in tone. But the substance is the same: both are educational, and both are no-response soft notices. The variant you received changes nothing about what you are required to do — which, formally, is nothing.

Both letters are public — the IRS posts the full text of Letter 6174 and Letter 6174-A — and reading them side by side shows exactly where they diverge. The body text is nearly identical. The differences fit in one table:

That postscript is the entire practical difference. Letter 6174 assumes ignorance; Letter 6174-A suspects an error and says the IRS may follow up. And note what the two letters share: the identical warning that “if you do not accurately report your virtual currency transactions, you may be subject to future civil and criminal enforcement activity.” Even the gentler variant is not toothless.

A letter that requires no response still tells you something: reconcile your records now, while it is a choice rather than a scramble.

Why “no response required” does not mean “no action”

First, the letter is not speculative. It opens: “We have information that you have or had one or more accounts containing virtual currency.” That information came from somewhere — the IRS’s compliance programs have included a November 2017 federal court order requiring Coinbase to produce records on roughly 14,000 customers who had at least $20,000 in any one transaction in a single year between 2013 and 2015, and data collection has only widened since. As then-Commissioner Chuck Rettig put it in the 2019 announcement: “The IRS is expanding our efforts involving virtual currency, including increased use of data analytics.”

Second, the stakes of inaccuracy are real. An underpayment attributable to negligence or a substantial understatement can carry a 20 percent accuracy-related penalty under IRC §6662; the civil fraud penalty under IRC §6663 is 75 percent of the underpayment attributable to fraud — on top of the tax and interest.

Third, time is not automatically on your side. Under IRC §6501, the IRS generally has three years from filing to assess additional tax — but six years if you omitted more than 25 percent of the gross income stated on the return, and no limit at all for a fraudulent return or a year you never filed. The years these letters concern do not necessarily age out.

Fourth, the matching net is tightening. Under the final broker reporting regulations, brokers report gross proceeds on Form 1099-DA for transactions on or after January 1, 2025, and add cost basis for certain transactions on or after January 1, 2026 — our Form 1099-DA guide covers the details. More third-party data means more automated comparison between what brokers report and what taxpayers file, and a mismatch is exactly what generates a CP2000 notice. The time to find a discrepancy is before the IRS’s systems do.

A self-audit, step by step

The practical value of a 6174 or 6174-A is as a prompt. Here is the review the letter is nudging you toward, in order:

1. Fix the scope. Neither letter names a tax year — the header identifies only the tax form, Form 1040. Start with every year you transacted in digital assets, and prioritize the years still open for assessment under the rules above.
2. Export your exchange histories — from every exchange and wallet you use or have used. Platforms shut down and data disappears; get your records while you can. The letters themselves instruct you to “maintain and review all transaction records, including bank, wallet, and exchange reports and statements” to determine basis and amounts received.
3. Confirm your basis records — for each acquisition: the date, the amount paid, and the fees. Basis is what keeps a proceeds figure from looking like pure gain. A worked example: you bought 0.5 BTC in 2021 for $8,000 plus an $80 exchange fee, so your basis is $8,080. You sold it in 2024 for $21,500, paying a $110 fee, so your amount realized is $21,390 — a long-term capital gain of $13,310, reported on Form 8949 and Schedule D. Without the basis records, the paper trail shows $21,500 of proceeds and nothing else, and the whole amount can be treated as gain until you prove otherwise.
4. Walk every disposal, not just cash-outs. The letters spell this out: an exchange “includes the use of the virtual currency to pay for goods, services, or other property, including another virtual currency such as exchanging Bitcoin for Ether.” Crypto-to-crypto trades, spending coins, and income received in crypto — mining, staking, payment for work — all belong on the return, on the schedule that fits.
5. Compare against what you filed — for the years the letter concerns and since, including your answer to the digital asset question on Form 1040. If everything reconciles, you are done, and better documented than most. If it does not, file Form 1040-X for each affected year — with the letter number written at the top of the first page, mailed to the address printed in your letter.

What not to do

• Do not ignore it unexamined. Filing nothing is the correct outcome only after your records confirm your returns were right. The letter is the IRS telling you it holds account-level data; the review is how you find out whether that data and your filings agree.
• Do not send a reply. There is nothing to respond to and no form to return. The productive response is internal: reconcile, document, and correct if needed.
• Do not treat a missing 1099 as permission. Both letters are explicit that you must report virtual currency transactions “regardless of whether you received a payee statement” such as a Form W-2 or 1099.
• Do not amend on guesswork. An amended return built on estimated basis invites the same mismatch you are trying to prevent. Rebuild the records first, then file once, accurately.
• Do not confuse it with a scam. A genuine Letter 6174 or 6174-A arrives by mail, asks for no payment and no reply, and matches the samples the IRS posts on IRS.gov. Any “crypto letter” demanding immediate payment is not this letter.

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.