Senator Patrick Toomey and Democratic Senator Krysten Sinema initiate the review of the Virtual Currency Tax Fairness Act proposing a lower rate for taxed crypto transactions.
The Virtual Currency Tax Fairness Act was first introduced in February to exclude taxing crypto transactions of less than $200.
However, on July 26th, Republican Senator Patrick Toomey and Democratic Senator Krysten Sinema introduced a reviewed bill, which suggested excluding taxes for “Bitcoin transactions up to $50, or trades which net a gain of up to $50”.
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Under the current laws, every crypto transaction is taxable. The investors are required to calculate their crypto gains from the time of purchase to the time of another transaction of the same cryptocurrency. Overall, the taxes of each transaction can reach up to 20% of the gains.
The Internal Revenue Service (IRS) considers that any exchange of Bitcoin is a taxable event, regardless of its size. Therefore, it suggests that the IRS is looking into Bitcoin purely as an investment, although its official documents state that Bitcoin “operates like ‘real’ currency”.
It is believed that lowering the scale of taxed transactions would allow getting closer to integrating cryptocurrency as a payment method to purchase everyday goods in the US.
The exclusion of some crypto capital gains has been discussed for quite some time. The first bill has been introduced in 2017, suggesting lowering the purchase taxation to $600. Afterward, in 2020 it was also discussed to revoke taxes for transactions lower than $200 but this proposal never reached the voting stage.
However, it is unlikely that Congress will take a look into this initiative before the August recess and midterm elections. Although there have been some initiatives in integrating cryptocurrencies into the everyday lives of Americans, it is believed that legislation may become possible only next year.
