The law, previously introduced by Washington Representative Susan Delbini, aims to exempt cryptocurrency users from paying taxes on transactions under $200.
Under the Virtual Currency Tax Justice Bill of 2022 released Tuesday, Washington Representative Susan Delbini is seeking to amend the 1986 Internal Revenue Code to exclude profits from certain in-person virtual currency transactions. If signed into law, the law could prevent the Internal Revenue Service or the IRS from requiring US representatives to pay capital gains tax on cryptocurrencies of $200 or more.
“The old rules about virtual currency don’t take into account the possibility of using it in everyday life, but they treat it like stocks or ETFs,” Delbini said. “In recent years, virtual currency has developed rapidly, and there are more opportunities to use it in everyday life. The United States should be aware of these changes and ensure that our tax laws evolve with the use of virtual currency.”
Congress received two different versions of the bill, neither of which was voted on. In 2017, actor David Schweiker proposed a bill that would exempt crypto transactions under $600, which he also co-sponsored with DelBene in the current draft. Two lawmakers reintroduced the bill in 2020 under the same title, lowering the minimum amount to $200. Pro-cryptocurrency representatives Darren Soto and Tom Emmer sponsored the 2020 bill, as well as the latest issue.
“With consumers increasingly using cryptocurrencies to conduct everyday transactions, we need to modernize their tax system,” Emer said in a statement to Cointelegraph. “This logical bill will allow Americans to use their digital wallet as easy as using cash.”
As tax season approaches in the US, many crypto users are responsible for reporting earnings from cryptocurrency. However, residents generally do not have to pay capital gains tax for HODLing, but only if they sell, exchange or transfer tokens. The proposed bill proposes that the amendments to the tax code be applied to transactions made after December 31, 2021.
Related: What to Know (and Beware of) About New Cryptocurrency Tax Reports from Tax Authorities
Under current US tax law, the share of capital gains is about 20%. The deadline for residents to file taxes on both crypto-currency income and securities issuance is April 18.