Senate Small Bitcoin Transaction Tax Exemption Bill – Bitcoin Magazine
- The Virtual Currency Tax Fairness Act seeks to provide tax exemptions for transactions up to $50 or trades that result in a capital gain of less than $50.
- Senators Patrick Toomey and Krysten Sinema are introducing the bill today.
- A house bill was previously introduced with a threshold of up to $200 last February under the same name.
The Virtual Currency Tax Fairness Act is being introduced today by Senator Patrick Toomey (R-PA) and Democratic Senator Krysten Sinema (D-AZ) to provide tax exemptions for bitcoin transactions up to $50, or trades that result in a gain of up to $50, following CNBC.
“While digital currencies have the potential to become a regular part of Americans’ everyday lives, our current tax code stands in the way,” Toomey said of the two-pronged effort.
Senator Toomey is not alone in his opinion, as several introductions of legislation have been presented in an attempt to ease the tax requirements for those who want to trade in or invest small amounts of money in bitcoin and other cryptocurrencies.
Congresswoman Suzan K. DelBene of Washington previously sponsored the Virtual Currency Tax Fairness Act introduced earlier this year that sought to exempt gains from bitcoin transactions of less than $200.
Similarly, Senators Kirsten Gillibrand (D-NY) and Cynthia Lummis (R-WY) introduced the Responsible Financial Innovation Act in an effort to also exempt capital gains taxes up to $200 from bitcoin payments for goods and services.
Currently, the Internal Revenue Service (IRS) states that “the sale or exchange of convertible virtual currency, or the use of convertible virtual currency to pay for goods or services in a transaction with the real economy, has tax consequences that may result in a tax liability.” ”
Therefore, any transaction involving the exchange of bitcoin is considered a taxable event by the IRS, regardless of how small the transaction may be. This sweeping generalization assumes that bitcoin is strictly an investment vehicle, although the IRS acknowledges that “it functions as ‘real’ currency.” Thus, lawmakers are faced with the battle to reduce the tax burden regarding bitcoin’s use as a currency.
However, Congress will take a longer break in August before the upcoming midterm elections, and Toomey has no plans to run for re-election. Therefore, if Congress does not act, Toomey may not be around to carry this torch in future sessions.
