Last Updated on July 10, 2026 by Patrick Camuso, CPA
Quick answer (read this first):
What it is: IRS Letter 6173 is a response-required compliance letter sent to taxpayers the IRS believes had cryptocurrency transactions that were not properly reported. Unlike Letters 6174 and 6174-A, it demands a reply by a stated deadline, and one of its response paths asks the taxpayer to certify compliance under penalty of perjury.
Why it is dangerous to answer carelessly: Signing the perjury certification when prior reporting does not actually survive scrutiny is how an honest taxpayer can end up defending a sworn statement that turned out to be wrong, and a prior certification can make a later good-faith-error position harder to argue. The certification is not a formality.
What to do: Do not sign anything and do not ignore the letter. Reconstruct and reconcile the referenced years against what was actually filed before choosing a response path, because the correct path depends entirely on what that reconciliation shows.
What happens if you ignore it: The letter states that the IRS may refer the account for examination if there is no response by the deadline. Silence forfeits the compliance window and moves the matter up the enforcement ladder.
What IRS Letter 6173 Is
IRS Letter 6173 is a response-required IRS compliance letter sent to cryptocurrency holders the agency believes did not properly report their digital asset transactions. It is the most serious of the three virtual currency soft letters, and unlike Letters 6174 and 6174-A, it demands a reply by a stated deadline. The IRS sends it when it has information suggesting a taxpayer held or transacted in cryptocurrency and may not have reported that activity correctly. Receipt of the letter does not mean the IRS has concluded that additional tax is owed. It reflects the IRS’s belief that additional review or corrective action may be warranted based on the information available to it. It sits in the same family as Letters 6174 and 6174-A, the soft letters the IRS began issuing to crypto holders in 2019 under its Virtual Currency Compliance campaign, when it announced through IR-2019-132 that more than 10,000 taxpayers would receive them, but it is the only one of the three that requires a response.
Letters 6174 and 6174-A are advisory, framed as educational reminders that do not demand a reply. Letter 6173 is different in kind, because it states that the IRS believes the taxpayer did not meet filing and reporting obligations for digital asset transactions, and it directs the recipient to take one of three specific actions by a stated respond-by date. The IRS has generally used this letter for taxpayers whose data suggests a higher likelihood of unreported activity, which means receiving a 6173 rather than a softer letter is itself a signal about what the agency believes it holds. Since the digital asset question became a standard part of the Form 1040, a taxpayer who answered it inaccurately has made a representation on a signed return, which can let the IRS bypass the educational soft-letter step entirely rather than extend the courtesy of a warning.
The letters trace back to enforcement data rather than random selection. Historically, much of that data came from John Doe summonses served on major exchanges, court-authorized demands compelling a platform to turn over records for entire categories of users, sometimes reaching accounts with as little as twenty thousand dollars in activity across multiple years, and enforcement is now fed by additional channels including 1099-DA matching, blockchain analytics, voluntary disclosures, and information sharing with foreign tax authorities. The early 6173 letters referenced tax years roughly spanning 2013 through 2020, before any standardized reporting regime existed, and the arrival of Form 1099-DA reporting for 2025 transactions gives the IRS a far larger data pipeline to drive the next generation of these letters.
Why the Perjury Certification Makes This Letter Dangerous
The feature that separates Letter 6173 from every other crypto notice is one of its response paths. The letter allows a taxpayer who believes prior reporting was accurate to submit a statement of facts, signed under penalties of perjury, certifying compliance. The exposure that certification creates is the reason this letter demands more care than any other crypto notice.
A knowingly false certification signed under penalties of perjury may create exposure under Section 7206(1) of the Internal Revenue Code, which makes it a felony to willfully sign such a statement while not believing it to be true and correct as to every material matter. That statute requires proof of willfulness, which is fundamentally different from an honest mistake or a good-faith misunderstanding, so an incorrect certification is not the same thing as a criminal one. The gap between believing reporting was accurate and having verified it against reconstructed records is the challenge, because most recipients have never performed the lot-level accounting that would confirm their prior returns were correct, and certifying from assumption rather than reconciliation is how an honest taxpayer ends up defending a statement that turned out to be wrong.
There is a second, quieter concern that applies even where nothing rises to the level of a false-certification charge. A prior sworn certification that the returns were accurate may make it more difficult to argue later that reporting errors resulted from misunderstanding or incomplete records. If a subsequent examination surfaces something the taxpayer overlooked, a wallet transfer misread as a sale, unreported staking rewards, a miscalculated basis, the earlier certification is a document the taxpayer has to account for, because they already stated under oath that the returns were accurate and complete. The certification that was meant to close the matter can complicate a later dispute.
This is why a quick signature is close to the worst available response, and why the certification path should never be taken without first verifying that the underlying returns actually withstand scrutiny.
The Three Response Paths
Letter 6173 directs the taxpayer to take one of three actions by the respond-by date, and the correct choice depends entirely on what the reconciliation of the referenced years reveals.
The first path is filing delinquent returns. Where the taxpayer failed to file for one or more of the years the letter covers, the response is preparing and filing those returns with the digital asset activity properly reported.
The second path is amending prior returns. Where returns were filed but the crypto activity was omitted or the gain, loss, or income was calculated incorrectly, the taxpayer files amended returns correcting the reporting and paying the resulting tax, interest, and any applicable penalty. Amending is not a clean slate, because the IRS retains the right to assess interest and penalties on the corrected amounts, including the 20 percent accuracy-related penalty where the statutory requirements are met. A statement accompanying the amendments that explains why the transactions were not reported earlier, supported by documentation, can help reduce or abate those penalties. Even so, amending is frequently the right path for taxpayers whose reconciliation confirms underreporting, and it is generally a stronger position than waiting for the IRS to propose its own number.
The third path is the compliance certification. Where the taxpayer genuinely believes prior reporting was complete and accurate, the response is a statement of facts explaining that position, signed under penalties of perjury. This path carries the exposure described above and is appropriate only when a full reconstruction has confirmed the returns are accurate, not when the taxpayer simply assumes they are.
The common thread is that none of these paths can be chosen responsibly before the underlying work is done. Whether the answer is a delinquent return, an amendment, or a certification depends on a fact the taxpayer usually does not know at the moment the letter arrives, which is whether the prior reporting was actually correct. The single most common mistake with a 6173 is answering it before that reconciliation is finished, because a response drafted from memory or assumption is how taxpayers accidentally certify a return that will not withstand review, send numbers that contradict their own records, or volunteer information that reframes a civil matter. The reconciliation comes first, and the response follows from what it shows.
What an Adequate Response Contains
An adequate response includes a statement of facts explaining the taxpayer’s position, a complete history of previously reported income from digital asset transactions, an explanation of the steps taken to comply with reporting requirements, and copies of the previously filed documents that support the compliance claim, typically including the Form 8949 and Schedule D that reported the digital asset sales and dispositions for the years in question. It closes with the signed and dated certification section stating, under penalties of perjury, that the taxpayer is submitting documents demonstrating compliance with reporting obligations. The taxpayer’s current contact information belongs at the top of the letter alongside the response address. The response itself stays disciplined, answering what the letter asks with the supporting records and no more, because a response that argues, editorializes, or volunteers detail beyond the reconciliation can open questions the letter never raised. At the same time, disciplined does not mean thin, because a bare assertion that nothing is owed, unsupported by a transaction-level reconciliation tying reported figures to actual activity, is not a credible compliance response, and it invites exactly the examination the letter is offering a chance to avoid.
Before any certification is signed, every transaction across the referenced years should be reconstructed from exchange records, wallet histories, and on-chain data, capturing not just buys and sells but the swaps, staking rewards, airdrops, hard forks, liquidity provision, lending, and NFT activity that each carry their own treatment, then reconciled line by line against what the returns actually reported. That reconstruction is what turns a certification from a hope into a defensible statement, and the same work produces the amended returns if the reconciliation instead reveals underreporting. For investors whose records are incomplete, which describes most people who receive this letter, the substantive work is cost basis reconstruction, and our crypto cost basis reconstruction practice is built around exactly this. Taxpayers with unfiled years behind the letter should start with our guide to fixing crypto taxes for years you never filed.
The Deadline and the Extension Question
Letter 6173 states a respond-by date, generally around 30 days from the date on the letter, though the stated period can run longer. That deadline is the constraint on the entire response, because the reconstruction work behind a defensible answer takes time that a 30-day window does not always allow. An extension may be requested by written request, but it should be requested and confirmed rather than assumed. Where the reconstruction cannot be completed inside the original window, securing additional time in writing is far better than either rushing a certification or letting the deadline pass.
The interaction between the deadline and the reconstruction work is the practical heart of how to respond to IRS Letter 6173. The letter asks for a decision, the correct decision depends on the reconciliation, and the reconciliation takes longer than the letter allows for anyone with meaningful transaction history. Recognizing that early, and moving immediately on both the records and the extension question, is what separates a controlled response from a rushed one.
What Happens If You Do Not Respond
Letter 6173 states plainly that if the IRS does not receive a response by the respond-by date, it may refer the taxpayer’s account for examination. Nonresponse is not a neutral option that lets the matter fade.
A soft letter is not itself the start of an examination, but the IRS has been clear that the response, or its absence, factors into what happens next, and the agency has treated the 6173 as an enforcement tool rather than a routine mailing, allocating resources to pursue non-responders. Ignoring a 6173 forfeits the one window in which the taxpayer can establish compliance or correct reporting on favorable terms, before the IRS proposes its own numbers, and moves the matter toward examination, where the scope is broader and the taxpayer’s position is harder to control. Ignoring the letter may increase civil enforcement risk, and in cases involving evidence of willful noncompliance it could contribute to broader enforcement concerns, which is a materially worse position than engaging with the letter early. The letter is best understood as an opportunity that closes on the respond-by date.
The National Taxpayer Advocate has formally criticized the procedural posture of the 6173, and the criticism goes further than tone. In a report to Congress, the Advocate took the position that the letter’s demands cross from educating taxpayers into imposing examination-level production burdens outside an examination and outside its protections, and that in doing so the letter runs against the Taxpayer Bill of Rights, specifically the right to privacy and the right to be informed. The letter can require factual and legal support spanning multiple years, some of which may fall outside the normal three-year assessment window, it asks for information the IRS does not require on a return, and it does not tell the taxpayer that the letter is not part of an examination, which the Advocate observed makes it read as a threat directed at people who believe they are already compliant. That position has a practical edge, because those criticisms may become relevant if a taxpayer later ends up in a dispute with the IRS over a contested 6173. None of this changes the practical reality for a recipient, which is that the letter requires a response and that the response should be built on reconstructed records rather than assumption.
Letter 6173 in the Broader Enforcement Picture
Letter 6173 is one rung on an enforcement ladder that runs from advisory soft letters through automated notices to full examination. It sits near the bottom of that ladder in severity but at the top of the soft-letter family in seriousness, because it is the only soft letter that requires a response and the only one that asks for a sworn certification.
Understanding where the letter sits helps calibrate the response. A 6173 is earlier and more workable than a CP2000 automated notice or an examination, which means it is also the widest remaining window to establish compliance before the IRS commits to a position. Our guide to IRS crypto letters covers the full family and how the letters escalate, and our guide to Letters 6174 and 6174-A covers the advisory letters that sit just below the 6173. Where the matter has already advanced to an automated proposal, our guide to the crypto CP2000 notice covers that stage.
For taxpayers whose past noncompliance was knowing rather than accidental, the consideration is different, and the right path may run through the IRS Voluntary Disclosure Practice rather than an ordinary response to the letter. Whether prior conduct was willful is a legal determination with high stakes, and it should be assessed with professional guidance before any response path is chosen, because the wrong choice can foreclose options that would otherwise remain open.
For investors facing a Letter 6173 now, our cryptocurrency tax resolution practice handles the full response, from reconstruction and reconciliation through the certification or amended returns and direct communication with the IRS. Work with a crypto CPA established in this market since 2016.
Contact us about the letter you received
Frequently Asked Questions
What is IRS Letter 6173?
IRS Letter 6173 is a compliance letter the IRS sends to taxpayers it believes had cryptocurrency transactions that were not properly reported. Unlike Letters 6174 and 6174-A, which are advisory, Letter 6173 requires a response by a stated deadline and directs the taxpayer to file delinquent returns, amend prior returns, or certify compliance under penalty of perjury. Receiving it generally signals that the IRS has data associating the taxpayer with digital asset activity it believes went unreported.
Do I have to respond to Letter 6173?
Yes. Letter 6173 requires a response by the respond-by date printed on the letter. The letter states that the IRS may refer the account for examination if no response arrives. This is the key difference from Letters 6174 and 6174-A, which are advisory and do not require a reply. Ignoring a 6173 forfeits the compliance window and moves the matter toward examination.
Why is signing Letter 6173 under penalty of perjury dangerous?
Signing Letter 6173 under penalty of perjury is dangerous because certifying compliance that does not actually hold up can support exposure under Section 7206(1), the federal false-statement statute, and can undercut a good-faith-error defense in any later examination. If a taxpayer signs a sworn statement that all crypto was reported correctly and a later review finds something was missed, the prior certification makes that position much harder to defend. The certification should never be signed before a full reconstruction confirms the prior returns are accurate.
What are the three response options for Letter 6173?
The three response options for Letter 6173 are filing delinquent returns for any years not filed, amending prior returns where crypto activity was omitted or miscalculated, or submitting a statement of facts signed under penalty of perjury certifying that prior reporting was complete and accurate. The correct choice depends entirely on what a reconciliation of the referenced years reveals about whether the prior reporting was actually correct.
What should an adequate Letter 6173 response include?
Where a compliance certification is appropriate, an adequate response includes a statement of facts explaining the taxpayer’s position, a complete history of previously reported digital asset income, an explanation of the steps taken to comply, and copies of the previously filed documents supporting the claim, sent to the address and eFax number on the letter. It closes with the signed and dated certification under penalties of perjury. The response should be built on a full reconstruction of the referenced years, not an assumption that the returns were correct.
What happens if I ignore Letter 6173?
The letter states that the IRS may refer the account for examination if there is no response by the deadline. Nonresponse forfeits the compliance window, where the taxpayer can establish compliance or correct reporting before the IRS proposes its own numbers, and moves the matter up the enforcement ladder toward examination, where the scope is broader and the taxpayer’s position is harder to control.
Can the Letter 6173 deadline be extended?
Sometimes. The respond-by date can occasionally be extended by written request, but an extension should be requested and confirmed rather than assumed. Because the reconstruction behind a defensible response often takes longer than the 30-day window, securing additional time in writing is far preferable to rushing a certification or letting the deadline pass.
Is IRS Letter 6173 even legal, and does it violate taxpayer rights?
The letter is a valid IRS communication, but the National Taxpayer Advocate has formally criticized it. In a report to Congress, the Advocate took the position that Letter 6173 demands examination-level information, including a sworn statement and records spanning years that may fall outside the normal assessment window, without providing the rights and protections an actual examination carries, and that this runs against the Taxpayer Bill of Rights, specifically the right to privacy and the right to be informed. That criticism does not excuse a taxpayer from responding, but those concerns may become relevant later if the matter moves into a dispute with the IRS.
Does receiving Letter 6173 mean I am under criminal investigation?
No. Receiving Letter 6173 is not a criminal investigation, and the overwhelming majority of crypto noncompliance resolves civilly through corrected filings, tax, interest, and penalties. The paths that create genuinely serious exposure are the avoidable ones, particularly certifying compliance falsely under the perjury statement. Taxpayers who reconstruct their records and respond accurately are treated materially better than those who sign a careless certification or ignore the letter.
This article is provided by Camuso CPA for general informational purposes and does not constitute legal, tax, accounting, or investment advice. Tax laws and regulations are evolving rapidly and the information presented may not reflect current guidance. Reading this article does not create a CPA-client relationship. For advice on your specific situation, schedule a consultation with Camuso CPA.
Camuso CPA, PLLC
