New Congressional Bill Seeks To Exempt Small Crypto Transactions From Taxes
A Congressional bill seeking to exempt daily crypto purchases and transactions from capital gains taxation has been returned to the US Congress.
The bill known as “The Virtual Currency Tax Fairness Act of 2020,” seeks to exempt digital currency expenditures that are personal transactions from capital gains taxation. Users will not be required to report when they used their crypto assets whose values have since changed as per the value of the US dollar on their daily expenses.
The bill was introduced to the house by Representatives David Schweikert (R-AZ) and Suzan DelBene (D-WA) on Jan.16. In 2017, Schweikert had introduced a similar bill but had recommended a greater exemption than the current one.
The current tax law has faced challenges in the advent of cryptocurrencies as at times they are taken as investments, other times as commodities while other times like other currencies. The bill seeks to simplify on the last form of crypto for both traders as well as users.
The bill seeks to address various issues that came to the fore from the IRS after the agency stated that Bitcoin and other cryptos can be said to be some form of property whereby, any transaction big or small leads to a taxable event and the users are liable for capital gains taxation. This 2014 determination by IRS led to criticism that it infringes on the use of cryptos as a currency as a result of the tax burdens involved.
As per the bill, taxpayers will be exempted from duty reporting if the gains are less than $200. The previous bill had set the limit slightly higher at $600. In addition, the bill will also insert a fresh clause classifying this as gross income. As the bill states:
“Gross income of an individual shall not include gain, by reason of changes in exchange rates, from the disposition of virtual currency in a personal transaction (as such term is defined in section 11 988(e)). The preceding sentence shall not apply if the gain which would otherwise be recognized on the transaction exceeds $200.”
If the Congress okays the bill, it will cover transactions that have occured only after Dec. 31, 2019.
As the Block reports, the bill was hailed by Coin Center which has been pushing for exemptions on transactions. The group said that the bill provides an easy solution to a glaring problems when it comes to the taxation of cryptos and will help in the enhancement of financial technology.