Two House of Representatives members in the US have filed a bill looking to set into law a tax exemption for transactions made with cryptocurrencies.
In 2014, the IRS stated that it would look at cryptocurrencies as a type of property for tax purposes. This meant that any profits made when trading a cryptocurrency would be liable for a capital gains tax. The wording of the IRS decision covered all transaction involving bitcoin, even a cup of coffee. In short, if you bought cryptocurrency at $1, and then spent it on a $2 cup of coffee, you would owe tax on the difference because there would be a gain.
The representatives, Jared Polis and David Schweikert, who lead the Congressional Blockchain Caucus, are looking to reduce some of the issues from that ruling with what is now termed as the Cryptocurrency Tax Fairness Act.
The bill, if passed, would make a de minimis exemption for cryptocurrency transacting below $600 starting 2018.
The text within the bill states:
“Gross income shall not include gain from the sale or exchange of virtual currency for 5 other than cash or cash equivalents….[if the amount of gain excluded from gross income under subsection (a) with respect to a sale or exchange shall not exceed $600.”
CoinDesk, Jerry Brito, executive director of the DC-based nonprofit Coin Center who aided with the the bill likened the move to a previous one taken by Congress to create exemptions for purchases made using foreign currency.
“What we have done with this bill is do something very similar, to create a de minimis exemption for small purchases.”
The prospects of the bill in a Congress riddled with Republican infighting and incoming scraps over the federal government’s borrowing are shaky. However, Brito was cautiously optimistic, alluding to the efforts to reform the US tax system as an alignment with that bill.t