House Representative Suzan DelBene, introducing the latest iteration of the bill, said the United States needs to “ensure that our tax code evolves with our use of virtual currency.”
A bill previously introduced by Washington Representative Suzan DelBene aims to exempt crypto users from paying taxes on transactions under $200.
According to a Tuesday draft of the Virtual Currency Tax Fairness Act of 2022, Washington Representative Suzan DelBene is seeking to amend the Internal Revenue Code of 1986 to exclude gains from certain personal transactions of virtual currency. If signed into law, the bill could stop the Internal Revenue Service, or IRS, from requiring U.S. filers to pay taxes on capital gains from crypto transactions of $200 or more.
“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 DelBene. “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.”
Congress has received different versions of the bill on two other occasions, with neither receiving a vote. In 2017, Representative David Schweiker proposed a bill exempting crypto transactions under $600 in addition to co-authoring the current version with DelBene. The two lawmakers reintroduced the bill in 2020 under the same name, lowering the threshold to $200. Pro-crypto Representatives Darren Soto and Tom Emmer co-sponsored the 2020 bill as well as the most recent iteration.
“As consumers increasingly use cryptocurrencies to complete everyday transactions, we must modernize their tax treatments,” said Emmer in a statement to Cointelegraph. “This common-sense bill will finally allow Americans to use their digital wallet as seamlessly as cash.”
With tax season approaching in the United States, many crypto users are responsible for reporting gains on crypto holdings. However, residents typically do not have to pay capital gains taxes for HODLing, but rather only if they sell, exchange, or transfer their tokens. The proposed bill suggests the changes to the tax code would apply for transactions made after Dec. 31, 2021.
Related: Things to know (and fear) about new IRS crypto tax reporting
Under current U.S. tax law, the rate on capital gain events is roughly 20%. The deadline for residents to file taxes on both crypto and fiat income is April 18.
