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IRS Crypto Warning Letters Explained: 6174, 6173, and CP2000

IRS Crypto Warning Letters Explained: 6174, 6173, and CP2000
IRS Crypto Warning Letters Explained: 6174, 6173, and CP2000
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Got a warning letter from the IRS about your cryptocurrency? Don’t panic. 

Recently, more and more investors have reported receiving letters related to their cryptocurrency activity. In this guide, we’ll break down what you need about each warning letter (and what you should do to avoid further action from the IRS).

Letter Type What It Means Severity
Letter 6174 Informational letter. The IRS knows you own crypto. No action is required if you’ve filed correctly. 🟢 Low
Letter 6174-A Stronger warning. The IRS suspects underreporting but still doesn’t require a response. You should double-check your filings. 🟡 Moderate
Letter 6173 The IRS believes you underreported income. You must respond by the deadline or risk a potential audit. đźź  High
CP2000 The IRS calculated that you underreported income and is ordering you to make a payment. You must respond within 30 days. đź”´ Very High

What is Letter 6174 for cryptocurrency? 

Letter 6174 is considered a no action letter, meaning it does not require a response. The letter should be considered a tap on the shoulder, not an accusation of underreporting. If you have met all the crypto tax filing obligations outlined in the letter, you have nothing to worry about. 

In most cases, you receive Letter 6174 if you are a known cryptocurrency investor. For example, the IRS may have received a 1099 form with your information from a cryptocurrency exchange, or you may have been identified in an exchange subpoena. 

If you’ve reported your cryptocurrency taxes accurately, no further action is required.

If you have not met all of your filing requirements, you should do so and amend any prior years tax returns that did not include your crypto-related gains, losses, and income.

What’s the difference between Letter 6174 and 6174-A? 

Letter 6174-A is a slightly more serious version of Letter 6174. While it doesn’t require a response, it means the IRS suspects you may have reported your income. 

If you receive this letter, you should double-check that you correctly reported your crypto taxes. You should also consider filing a crypto tax amendment for previous years.

What is Letter 6173 for crypto? 

Letter 6173 is more serious, and requires an immediate response. The IRS sends this letter if it has reason to believe you have underreported your crypto income. 

If you received Letter 6173, you have some options for responding:

  1. Properly file the missing tax returning including your cryptocurrency transactions
  2. Amend your prior years tax return if you did not properly report your cryptocurrency transactions
  3. Or, if you believe you filed your cryptocurrency taxes correctly, respond to the IRS with a written letter explaining how you arrived at the income reported.

What is CP2000 for crypto? 

Letter CP2000 is considered the most serious warning letter for cryptocurrency, and is one step away from a full audit. You must respond within 30 days. 

The IRS sends CP2000 when the agency believes you have underreported your cryptocurrency income and has calculated your estimated tax payment. 

If you receive CP2000, you must amend your tax return or provide detailed records of your transactions to show that you accurately reported your taxes. 

‍Why is the IRS sending more warning letters? 

In 2025, investors reported receiving more crypto warning letters. It’s likely that this trend will continue in years to come. 

Starting in 2026, crypto exchanges will be required to report customers’ capital gains and losses via Form 1099-DA. These letters will lead to more warning letters being sent to customers (even if you’ve filed your tax return accurately!)

Why is the tax estimate on my warning letter incorrect? 

If you’ve transferred cryptocurrency between wallets and exchanges, it’s possible that the IRS’s estimate of your taxable income is inaccurate. 

Example: Crypto transfer

Lucas buys $1,000 of BTC on Exchange A.

He transfers his cryptocurrency to a cold wallet.

He sells his BTC for $1,500 on Exchange B.

In this case, Lucas has a capital gain of $500. But Exchange B doesn’t know his original cost basis for acquiring crypto. As a result, it’s likely that the full cost of Lucas’s sale will be reported as a capital gain on Form 1099. 

In this situation, the IRS may accuse Lucas of under-reporting his taxes — even if he correctly reports $500 of capital gain. 

To prove his original cost basis, Lucas will need to provide records of his original purchase. 

I accurately reported my taxes. Why did I get a letter? 

Why did I receive Letter 6174?: Letter 6174 is often sent as an educational notice. It’s not necessarily an accusation of wrongdoing. 

Why did the IRS accuse me of under-reporting?: As noted in the section above, it’s possible that the IRS may have inaccurate information about your taxable income from cryptocurrency — especially if you’ve transferred cryptocurrency between wallets and exchanges. If this is the case, you should provide accurate records of your cryptocurrency transactions to prove you did not under-report. 

How does the IRS know I have crypto?

The IRS may receive information about your cryptocurrency holdings from exchange subpoenas or from 1099 forms sent by exchanges.

Will the IRS make crypto tax free? 

While President Trump promised to make US-based cryptocurrencies tax-free, no relevant legislation has been proposed to Congress. Until further notice, you are required to report your taxable income from cryptocurrency to the IRS. 

How do I file a crypto tax amendment?

If you under-reported taxes in a previous year, you should consider filing a crypto tax amendment. You can file an amendment using Form 1040X. 

The IRS is more lenient to taxpayers who are proactive about correcting their tax returns.

Should I hire a crypto tax professional? 

Depending on the severity of your situation, you may want to consider hiring a crypto tax professional.

A crypto tax professional can help you organize your records and help you respond to letters like CP2000. 

However, it’s important to note that hiring a crypto tax professional can be expensive ($3,000+). If you’re looking for a crypto accountant to help with your situation, consider using CoinLedger’s full-service tax preparation service. 

If you received a no-response letter like Form 6174, you may want to consider a cheaper option — like organizing your records and filing a crypto tax amendment. Generating a report with crypto tax software typically costs between $49-199.

How CoinLedger can help 

Looking for an easy way to generate a crypto tax report? Try CoinLedger — the platform trusted by more than 700,000 investors across the globe. 

CoinLedger allows you to import your transactions from hundreds of wallets and exchanges with the click of a button. 

Get started with a free account today.

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Miles Brooks
Written by:
Miles Brooks
Director of Tax Strategy

Miles Brooks holds his Master's of Tax, is a Certified Public Accountant, and is the Director of Tax Strategy at CoinLedger.

About the Author

CoinLedger has strict sourcing guidelines for our content. Our content is based on direct interviews with tax experts, guidance from tax agencies, and articles from reputable news outlets.

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