DelBene, Schweikert Introduce Bipartisan Legislation to Ease Use of Virtual Currency
Today, Congresswoman Suzan DelBene (WA-01) and Congressman David Schweikert (AZ-06) introduced the Virtual Currency Tax Fairness Act (H.R. 5635), a bipartisan bill which would amend the Internal Revenue Code of 1986 to specifically address transactions made with virtual currency. This bill creates a structure for taxing purchases made with virtual currency, further strengthening the legitimacy of virtual currency in the digital economy by creating parity in the tax code.
Currently, any gains realized from changes in exchange rates on a transaction using virtual currency must be reported as taxable income. Individuals must report these gains regardless of the size of the transaction or the purpose of the transaction. This includes purchases as small as buying a cup of coffee, because taxpayers are currently required to calculate and record any changes in the virtual currency’s value against the U.S. dollar from the time they purchased the virtual currency until it was used in the transaction. This makes the everyday use of virtual currency near impossible, discouraging people from using virtual currency and inhibiting the growth of our country’s digital economy.
H.R. 5635 would amend the Internal Revenue Code to provide a de minimis exemption for personal transactions made with virtual currency whose gains are less than or equal to $200. Additionally, this legislation would direct the Secretary of the Treasury to issue regulations for reporting personal transactions using virtual currency whose gains exceed $200.
“The original guidance on virtual currency did not take into account its potential for use in our daily lives, instead providing rules that are best applied to investments made using virtual currency,” said DelBene. “However, virtual currency has evolved, and there are now a myriad of ways people around the world are using it. We must stay on top of these changes and evolve our understanding of virtual currency in the tax code, allowing people to use virtual currency in their daily lives. This commonsense bill does just that, cutting the red tape and opening the door to further innovations, ultimately growing our digital economy.”“To remain a global leader, the United States must allow fair treatment of virtual currencies in our tax code, particularly small dollar transactions to occur without additional friction,” said Congressman Schweikert. “As Co-Chair of the Congressional Blockchain Caucus we are often working to move this body into the future, and this piece of legislation will be the right step forward in growing the U.S. digital economy.”
Tags: Tax Reform, Science and Technology