Republicans and Democrats don’t agree on much these days, but a large swath of both parties have made it clear they don’t want cryptocurrency users breaking out a calculator in order to pay the IRS every time they make a purchase. That’s because of a 2014 IRS decision that deemed the acquisition of cryptocurrency was deemed to be identical to buying stocks or bonds.
Right now, if you were to pay for a bottled water from a street vendor using Bitcoin, you would be required by law to calculate the miniscule amount of capital gains you acquired through the purchase as a result of the increased valuation of the cryptocurrency since you first obtained it. You would be required to do so for every similar purchase you make, and to report the sum of those capital gains on your annual tax return.
The Cryptocurrency Tax Fairness Act, introduced by Reps. Jared Polis (D-Colo.) and David Schweikert (R-Ariz.), co-chairs of the bipartisan Congressional Blockchain Caucus, would put an end to those calculations when transactions are less than $600. The goal, the congressmen said, is to re-incentivize the use of digital currencies.
"To keep up with modern technology, we need to remove outdated restrictions on cryptocurrencies, like Bitcoin, and other methods of digital payment.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."
"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.”
Coin Center Executive Director Jerry Brito said the legislation treats cryptocurrencies just like foreign currencies, and will “unleash innovation on applications” like micropayments, which were previously discouraged under existing IRS regulations.