U.S. lawmakers have resurrected a bipartisan push to exempt gains from small cryptocurrency transactions from being taxed.
On Thursday, Reps. Suzan DelBene (D-Wash.), David Schweikert (R-Ariz.), Darren Soto (D-Fla.) and Tom Emmer (R-Minn.) introduced “The Virtual Currency Tax Fairness Act of 2020,” an amendment to IRS tax code that would exempt realized gains under $200, otherwise known as a de minimis threshold.
From a practical standpoint the bill could simplify the tax burdens of day-to-day crypto users who must report even marginal capital gains under current federal law. This is based on a 2014 Internal Revenue Service guidance that treats bitcoin and other “convertible virtual currencies” as taxable commodities.
This legislation does not alter that bureaucratic determination, but it would provide relief for low-level use cases, like transactions, while enforcing it against more substantial users, like investors.
Neeraj Agrawal, director of communications for Coin Center, which lobbied the representatives on this bill, said it takes some pressure off everyday users.
“Extending this sensible exemption to cryptocurrency would allow users to do simple things like send small transactions to each other or fractions of pennies to dapps without having to deal with a fairly complicated capital gains calculation every time,” he said.
The bill would retroactively apply to all qualifying transactions from Dec. 31, 2019.
Representatives have tried to push through similar legislation before. In 2017, Schweikert co-sponsored more ambitious legislation that would have placed the bar at $600. His bill never made it to committee – it died on the House floor.
The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.