The Virtual Currency Tax Fairness Act of 2022 was introduced in the US Senate on Tuesday by the bipartisan team of Senators Patrick Toomey and Kyrsten Sinema. The bill is a complement to the one already in the House of Representatives, although it differs in one key detail.
Both the House and Senate bills exclude small purchases made with cryptocurrencies from capital gains tax. Currently, any purchase made with cryptocurrency is a taxable event, which forces buyers to calculate for tax purposes their profit by the variation in the value of the cryptocurrency from its acquisition to the time of the transaction. Capital gains tax can range from 0% to 20%, depending on a number of variables.
While #crypto has the potential to become part of our everyday lives, the current tax code stands in the way. @SenatorSinema and I are teaming up to make it easier to use digital currencies as a common method of payment by exempting from taxes small personal transactions. pic.twitter.com/B6K3jT7GBC
— Senator Pat Toomey (@SenToomey) July 26, 2022
The bill introduced in the House of Representatives in February would amend the 1986 Internal Revenue Code to exclude purchases of up to $200 from reporting to the Internal Revenue Service (IRS). The Senate version, however, sets the upper limit of the tax exclusion for purchases at $50. The IRS has explicitly stated that it expects small transactions to be tracked and reported.
Several bills have proposed a capital gains exclusion for cryptocurrency purchases. The Virtual Currency Tax Fairness Act of 2020 also proposed a $200 exemption, but that bill did not come to a vote. A bill in 2017 suggested amending the 1986 tax code to exclude purchases of up to $600. The Responsible Financial Innovation Act, introduced by Senators Cynthia Lummis and Kirsten Gillibrand in June, also contained a $200 exclusion on cryptocurrency purchases.
Alabama Republican Senator Toomey, the ranking member of the Senate Banking Committee, is a longtime supporter of cryptocurrencies. He is also the author of the Stablecoin TRUST bill, introduced in the Senate in May.
The Virtual Currency Fiscal Fairness Bill is unlikely to be considered in the Senate before the congressional break in August.
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