For digital currency users in the United States who might want to use their cryptocurrency for real-world commercial transactions, the rules under the existing tax regime are both complex and inexplicable. Those rules can turn even the most minor transactions into reportable capital gains – which is why digital currency users currently need to carefully record their transactions to track any potential tax obligations that may arise. A new bill in the U.S. House of Representatives could help ease that burden.
That bill, The CryptoCurrency Tax Fairness Act, has bipartisan support and was introduced today by Arizona’s Republican Representative David Schweikert and Colorado Democrat Jared Polis. Under the provisions of the proposed legislation, Congress would provide digital currency transactions of less than $600 with a tax exemption.
That de minimis exemption would free users from the need to track those minor transactions, and would eliminate any potential capital gains tax obligations that might otherwise arise. It would also be an important move to help remove barriers that currently make it difficult for many businesses and consumers to use digital currencies like Bitcoin for everyday transactions.
The bill’s sponsors were quoted in a statement on Polis’ website. Representative Polis described the current problem and the need for a solution, noting:
“Cryptocurrencies can be used for anything from buying a cup of coffee to paying for a car, to crowdfunding a new startup and more and more consumers are choosing to use this type of payment. To keep up with modern technology, we need to remove outdated restrictions on cryptocurrencies, like Bitcoin, and other methods of digital payment. By cutting red tape and eliminating onerous reporting requirements, it will allow cryptocurrencies to further benefit consumers and help create good jobs.”
Representative Schweikert was optimistic about the duo’s proposed solution, suggesting that it could help eliminate some of the existing barriers to more widespread digital currency use in the United States:
“Individuals all over the world are starting to use cryptocurrencies for small every day transactions, yet here in the States we have fallen behind and make cryptocurrency use more of a challenge than it needs to be. With this simple legislative change, anyone can make digital payments to buy a newspaper or a bike without worrying about tax code challenges.”