Cryptocurrency investors may receive IRS letters outlining tax obligations. The number of letters being issued has increased significantly, with nearly 800 conversations on crypto tax platform CoinLedger mentioning “IRS letters” in May and June. Letters come in three forms (6173, 6174, 6174-A) and require different actions if received.

Letter 6173 indicates a failure to meet U.S. tax filing and reporting requirements for virtual currency transactions. Letters 6174 and 6174-A are sent when the IRS believes you have virtual currency accounts but may not know reporting requirements. Responding to letter 6173 is mandatory, while letters 6174 and 6174-A may not require a response but necessitate checking and potentially amending form 1040 filings.

If you receive a letter 6173 in error, follow specific steps to contest it. Provide contact information, a statement of facts, copies of previously filed documents confirming compliance, and a signed letter 6173 section. This process requires thorough documentation and adherence to U.S. reporting requirements.

Read more at Nasdaq: 3 Things To Do if You Got an IRS Warning Letter About Your Crypto Activity