WASHINGTON—Saying they are seeking to reduce the burden of tracking taxes on cryptocurrency transactions of $50 and smaller, two senators have introduced legislation that would except reporting on transactions up to that threshold and on any trade in which someone earns less than $50.
Sen. Patrick Toomey (R-PA) has joined with Kyrsten Sinema (D-AZ) to cosponsor the exemption from the tax reporting requirements for crypto users making small investments or purchases.
According to CoinDesk, the Senate legislation, the Virtual Currency Tax Fairness Act, matches a similar bill already introduced in the House of Representatives. The idea of clearing low-level transactions from tax worries has also appeared elsewhere, including in a more comprehensive bill introduced this year by senators Cynthia Lummis (R-WY) and Kirsten Gillibrand (D-NY), CoinDesk reported.
“While digital currencies have the potential to become an ordinary part of Americans’ everyday lives, our current tax code stands in the way,” said Toomey.
Get Coffee, Not Tax Requirement
CoinDesk noted Toomey has sought to help the crypto industry on multiple ways before he retires from the Senate at the end of this session.
The latest bill will let people “use cryptocurrencies more easily as an everyday method of payment by exempting from taxes small personal transactions like buying a cup of coffee,” the bill states.
But as CoinDesk noted, the Internal Revenue Service has held a firm crypto policy. “When you sell virtual currency, you must recognize any capital gain or loss on the sale,” the IRS states on its website.
The Roadblock
That standard has been among the roadblocks standing in the way of crypto’s use in the U.S. as an alternative way to pay for things, industry advocates have argued, CoinDesk noted.
“This would foster use of crypto for retail payments, subscription services, and micro transactions,” Jerry Brito, executive director of Coin Center, a crypto policy think tank in Washington, told CoinDesk. “More importantly, it would foster the development of decentralized blockchain infrastructure generally because networks depend on small transaction fees that today saddle users with compliance friction.”