Senate Bill to Exempt Bitcoin Small Transaction Tax CryptoBlog

  • The Virtual Currency Tax Fairness Act aims to provide a tax exemption for transactions up to $50 or transactions that generate a capital gain of less than $50.
  • Senators Patrick Toomey and Krysten Sinema will introduce 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 introduced today by Sen. Patrick Toomey (R-PA) and Democratic Sen. Krysten Sinema (D-AZ) to provide a tax exemption for bitcoin transactions up to $50 , or trades that generate a net gain up to $50, depending CNBC.

“While digital currencies have the potential to become a regular part of everyday American life, our current tax code stands in the way,” Toomey said, regarding the bipartisan effort.

Senator Toomey is not alone in his view, as several legislative introductions have been introduced in an attempt to ease tax requirements for those looking to transact 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 which sought to exempt gains from bitcoin transactions under $200.

Similarly, Senators Kirsten Gillibrand (D-NY) and Cynthia Lummis (R-WY) introduced the Responsible Financial Innovation Act in a bid 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 an actual economic transaction, has tax consequences that may give rise to tax liability”.

Therefore, any transaction involving the exchange of bitcoins is considered a taxable event by the IRS, regardless of the size of the transaction. This sweeping generalization presupposes that bitcoin is strictly an investment vehicle, even though the IRS recognize that “it works like a ‘real’ currency”. Thus, legislators are faced with the struggle to reduce the tax burden regarding the use of bitcoin as currency.

However, Congress will take an extended recess in August ahead of the upcoming midterm elections, and Toomey does not currently intend to stand for re-election. Therefore, if Congress doesn’t take action, Toomey might not be there to carry that torch in future sessions.

Norman D. Briggs