US Congress Initiates New Bill on Crypto Taxing

A new bill that will exonerate personal crypto transactions from capital gains taxation has been revived in the US Congress.

How the Bill Works
The bill, which is dubbed “The Virtual Currency Tax Fairness Act of 2020,” will provide immunity for digital currency-related expenses that are recognized as personal transactions. This means that cryptocurrency users don’t have to document every instance where they used cryptocurrency to pay for normal day-to-day payments.

The proposed act was initiated by US Rep. Members Susan Delbene (Democrat- Washington) and David Schweikert (Republican- Arizona) on the 16th of January. The original version of the proposal was initiated by Schweikert in 2017 and contained significantly higher immunity.

Current tax rules find it difficult to grapple with the complexities of cryptocurrencies. Digital currencies function sometimes as an investment, sometimes like a commodity, and other times as a means of payment like normal currencies. The last class is what the bill seeks to clarify for cryptocurrency users.

The Issue with the IRS
Presently, the Internal Revenue Service demands tax payments from crypto users whose crypto tokens might have grown in value without the owners knowing or realizing. Such an assessment could make the use of crypto as a currency in the US very difficult.

The revived bill would absolve taxpayers from reporting duty in cases where gains accrued are below $200. The original version, however, put this figure at $600. This bill will cause the IRS to create a new category in its exclusions for gross income.

More Complaints from Congress to the Internal Revenue Service
Taxing cryptocurrencies has been a major challenge in the US. In December 2019, 8 members of Congress wrote a letter to the IRS requesting that the commission shed some light on its rules for documenting earnings from hard forks or airdrops.

Rep. members also wrote a similar letter in April 2019, asking the commission to make its methods more transparent.