The IRS has sent another round of warning letters to crypto users in the United States. This marks the second time the tax agency has dispatched such communications. Dated August 14, users have receiv
The IRS has sent another round of warning letters to crypto users in the United States. This marks the second time the tax agency has dispatched such communications. Dated August 14, users have received the letters as the IRS continues to address cryptocurrency taxation and compliance.
The first round went out in July 2019 to about 10,000 American crypto traders. Like that initial batch, this new wave comes in three forms: IRS Letter 6173, IRS Letter 6174, and IRS Letter 6174-A. Several recipients have posted details on social media.
The agency has not released official guidance about this mailing. The letters also arrive alongside the controversial virtual currency question on Form 1040.
IRS Letter 6173 carries the most weight of the three. It demands a response by a specified deadline. Ignore it and the IRS will conduct a detailed examination of your tax records. Recipients have three options for how to respond, depending on their situation.
Letters 6174 and 6174-A function differently. These are informational notices that remind taxpayers about their crypto tax obligations. They include details on relevant tax schedules, applicable forms, and where to find IRS resources.
If a trader omitted crypto transactions from their return, reported them wrong, or understated gains, the IRS expects an amended filing. When submitting the amended return, write either "Letter-6174" or "Letter-6174-A" at the top.
The IRS has not disclosed how many people received the letters or where it obtained their information. One possibility: crypto exchanges collect customer data for Know Your Customer purposes and may have shared it with the IRS.
