It gathers that information from tax forms the exchanges file, from court-ordered summonses that pulled historical account records, and now from the new Form 1099-DA.

The practical lesson, from someone who spent years inside the IRS building these cases, is simple: do not guess at what the IRS can see, and do not assume old activity is invisible. Reconstruct your own full history so you know what they know. Call (415) 968-1780 for a privileged consultation.

I spent years as an IRS Revenue Agent before joining Kugelman Law, and the single most common mistake I saw from taxpayers was underestimating how much third-party data the government already had in front of it.

With cryptocurrency, that gap between what people think the IRS knows and what it actually knows is especially wide. Here is how to think about it when a 6174 arrives.

Does Coinbase report to the IRS?

Yes. For years, major U.S. exchanges have filed information returns with the IRS reporting certain customer activity, and the categories of what gets reported have steadily expanded. When an exchange files a form about you, the IRS receives a copy and can match it against your return.

If the exchange reported activity that your return does not reflect, that mismatch is visible to the IRS without anyone opening an audit. A compliance letter like 6174 is often the first outward sign that such a mismatch may exist.

How the IRS got your 2017 to 2019 history

This surprises people who assume early activity is too old to matter. Beyond routine information reporting, the IRS has used John Doe summonses, which are court-authorized demands for records on entire groups of unnamed users, to obtain historical account data directly from major exchanges.

Coinbase was the subject of one such effort years ago that produced records for thousands of accounts, and other platforms have faced similar summonses since. The result is that transaction history from the 2017 to 2019 era, the exact window many people assume is forgotten, may already sit in the IRS’s hands.

What a former IRS agent looks at first

When a return came across my desk, the starting point was always the same: compare what third parties reported against what the taxpayer reported, and look at the gap. For crypto, that means lining up exchange data and summons records against the dispositions and income shown on the return.

Unreported sales, transfers that were never explained, and years with activity but no digital-asset reporting all stand out quickly. None of this requires suspicion of fraud. It is simply where the data does not line up, and that is what examinations are built on.

Form 1099-DA changes the picture going forward

The new Form 1099-DA brings digital-asset transactions into routine, standardized information reporting, which means the matching the IRS already does for stocks and wages now extends more fully to crypto.

Going forward, the IRS will receive far more detailed and consistent exchange data, narrowing the room for unreported activity to go unnoticed. For a 6174 recipient, the takeaway is that the enforcement environment is getting tighter, not looser, so getting prior years right now is better than waiting for the data to catch up. Our explainer on Form 1099-DA covers what exchanges are reporting and when.

Why a 6174 means “reconstruct, don’t guess”

Because the IRS may already have a fuller picture of your history than you do, the worst move is to respond to the situation based on memory or a partial export. Pull your complete transaction history from every exchange and wallet you have used, going back as far as the records allow, and rebuild your cost basis and your gains and losses year by year. Only then can you see where your returns and the IRS’s data agree and where they do not.

Our cryptocurrency accounting and audits team does exactly this reconstruction, including for messy multi-exchange histories, and it is the foundation for any sound response.

What to do with that history once you have it

Once your history is reconstructed, the path forward depends on what it shows. If your prior reporting holds up, you have peace of mind and a record ready if the IRS ever asks. If it does not, you can decide, with counsel, whether amended returns or another compliance route fits, before the IRS moves.

For what the letter itself means and whether it requires a response, see our hub guide, IRS Letter 6174 (crypto): what it means and what to do, and for how we defend matters that reach examination, see crypto tax audit defense.

Talk to a crypto tax attorney about your exchange history

If you received Letter 6174 and are not sure what the IRS can see about your Coinbase or other exchange history, get a privileged assessment and reconstruct your records before you act. Schedule a paid, privileged consultation with Kugelman Law by calling (415) 968-1780 or visiting our contact page.

In one federal matter, two IRS Notices of Deficiency proposing more than $557,000 across six years were settled in U.S. Tax Court down to roughly $38,000, and with avoided interest and California exposure the client effectively saved over $1.2 million. Results depend on specific facts. Past results do not guarantee future outcomes.

Frequently asked questions

Does Coinbase report my transactions to the IRS?

Yes. Major U.S. exchanges file information returns with the IRS reporting certain customer activity, and the IRS receives a copy to match against your return. The scope of what is reported has expanded over time and grows further with Form 1099-DA.

Can the IRS see my crypto from 2017 or 2018?

Often yes. In addition to routine reporting, the IRS has used John Doe summonses to obtain historical records for large groups of exchange users, including from that era. Older activity you assume is forgotten may already be in the IRS’s hands.

What is a John Doe summons?

It is a court-authorized demand for records about a group of unnamed taxpayers who fit a description, rather than a single named person. The IRS has used them to compel major cryptocurrency exchanges to turn over account and transaction data for thousands of users at once.

What does Form 1099-DA mean for me?

It brings digital-asset transactions into standardized information reporting, so the IRS receives more detailed and consistent exchange data going forward. That makes unreported activity easier for the IRS to spot, which is why addressing prior years now is wise.

Should I pull my full transaction history after getting Letter 6174?

Yes. Reconstruct your complete history from every exchange and wallet and rebuild your gains and losses year by year. Because the IRS may already have a fuller picture than you do, responding from memory or a partial export is risky. A complete reconstruction is the foundation for any sound next step.

About the authors

Otto Bosch is a tax controversy attorney at Kugelman Law and a former IRS Revenue Agent from the Global High Wealth group of the IRS Large Business & International (LB&I) Division. He is admitted to practice before the U.S. Tax Court and in Missouri, has been an IRS Enrolled Agent since 2024, and holds an LL.M. in Taxation. Otto was quoted in Tax Notes in 2026 on IRS examination training and the LB&I audit campaign targeting deferred legal fee structures. His practice focuses on IRS audit defense, high-net-worth examinations, and U.S. Tax Court litigation.

Alex Kugelman, the firm’s founder and managing attorney, is nationally recognized for cryptocurrency tax and has spoken on digital-asset tax and IRS enforcement on the Bitcoin.tax podcast and The Mark Milton Show. Together they handle the crypto and examination sides of these matters as one team.

This article is attorney advertising and general information, not legal advice. What the IRS has on a given taxpayer, and the right response, are fact-specific. Contacting Kugelman Law does not create an attorney-client relationship.