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Washington, D.C – Today, Congressman David Schweikert (AZ-06) and Congresswoman Suzan DelBene (WA-01) re-introduced the Virtual Currency Tax Fairness Act. This is a bipartisan bill that would revamp the Internal Revenue Code of 1986 to address virtual currency and its impact on the daily life of millions of Americans.
“Virtual currency is reshaping our everyday lives, and the United States needs to recognize this and work to treat these currencies fairly in our tax code,” said Rep. Schweikert. “This legislation is an important step forward, and it lays the groundwork for growing the digital economy.”
“Antiquated regulations around virtual currency do not take into account its potential for use in our daily lives, instead treating it more like a stock or ETF,” said Rep. DelBene. “However, virtual currency has evolved rapidly in the past few years with more opportunities to use it in our everyday lives. The U.S. must stay on top of these changes and ensure that our tax code evolves with our use of virtual currency. This commonsense bill cuts the red tape and opens the door to further innovations, ultimately growing our digital economy.”
“As the use of virtual currencies for retail payments increases, it’s important that Americans are able to easily understand their tax obligations. By providing an exemption for small everyday purchases, the Virtual Currency Tax Fairness Act would ease this burden for consumers. We’re proud to support the bill’s reintroduction in the 117th Congress,” said Kristin Smith, Executive Director of the Blockchain Association.
“While Bitcoin and other cryptocurrencies are technologically innovative payment methods, today you have to keep track of and report every transaction you make using them, whether it’s a $10,000 investment trade or whether you’re buying a 99¢ song online or a latte at a café. This obviously creates friction and puts cryptocurrencies at a disadvantage relative to other digital payment methods,” said Jerry Brito, Executive Director of cryptocurrency think tank Coin Center. “We applaud Representatives DelBene and Schweikert for their leadership in introducing the Virtual Currency Tax Fairness Act, which would treat cryptocurrencies similarly to how foreign currency is now treated and relieve users from having to keep track of small personal transactions. Not only will this create a level playing field for digital currencies, it will also help unleash innovation on applications like micropayments, which can consist of dozens of transactions per minute and thus are difficult to square with the current law.”
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.
This legislation 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.
Rep. Darren Soto (FL-09) and Rep. Tom Emmer (MN-06) are also original cosponsors.
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