Two politicians want to make bitcoin purchases below $600 not subject to tax laws. The lawmakers, Representatives David Schweikert and Jared Polis, who are also co-chairs of the Blockchain Caucus, hope to lesson the tax burden on cryptocurrency users. They are calling their bill the Cryptocurrency Tax Fairness Act.
Brief History of Bitcoin Taxation Rules
This news comes in light of the fact bitcoin is said to be taxable as property. In March 2014, the IRS released documentation sayings that “virtual currency” is fully taxable and counts as property. The Internal Revenue Service website said, “IRS Virtual Currency Guidance: Virtual Currency Is Treated as Property for U.S. Federal Tax Purposes; General Rules for Property
Transactions Apply.”
The agency further said wages paid to employees in “virtual currency” must be reported. Employees should fill out a W2 in order to report their wages to government for collection.
This information also comes alongside the IRS’s ongoing legal battle with the online wallet Coinbase. The government agency is trying to legally coerce the company into handing over user information pertaining to bitcoin accounts and other sensitive data.
Details of the Bill; Invigorate the Cryptocurrency Ecosystem
The Cryptocurrency Tax Fairness Act should allow for a de minimis exemption on all purchases less than $600, which means there be no property liability on smaller purchases. The bill said:
“To amend the Internal Revenue Code of 1986 to exclude from gross income de minimus gains from certain sales or exchanges of virtual currency, and for other purposes.”
If the bill were to get passed, cryptocurrency users would benefit greatly from it in terms of feeling comfortable with making micro-purchases with their bitcoin. It could also further invigorate the cryptocurrency ecosystem, especially after the PBOC outlawed ICOs/token sales.
Nonetheless, it will be interesting to see how governments decide to manage the way decentralized currencies continue to have an impact on the world economy.
I have been a student of economics for some time. Looking at this from this economic standpoint this tax exemption would be of some benefit to the average consumer, not to mention the college student. Let me first speak to he average consumer.
It is my opinion that this tax relief would take some time to catch on for the average person. Many are unaware of the new trends in this age of digital currencies. It is those in the younger generation like myself who are more aware of technology and the implications of this. That is what brought to mind the college student. Being 25 with near luddite parents I have had a little of a learning curve.
As the younger generation develops this newer for a currency the implications of tax relief are huge. The grocery store that allows for purchases in Bitcoin will have a leg up on the average supermarket. The consumer in Iowa who is plugged in will have 7% more cash to spend on anything they want.
This will help both the average consumer and the government. Consumers will be able to buy more goods from any dealer who accepts Crypto. The government will not be adversely affected, since people tent to spend the more they save.
Overall I would consider this a brilliant idea. It would help the consumer, the digital market, and retailers who are wise enough to see this is the future of business. We can only hope that this bill comes through and helps the future of Crypto.