The U.S. Congress has introduced a bill, Virtual Currency Tax Fairness Act to eliminate taxation on cryptocurrency used for day-to-day transactions. Also, the bill seeks to take away the need to report tax if the transaction would have resulted in gains of less than $200.
New Bill to Exempt Everyday Spenders of Cryptocurrency from Tax
Per the report, the U.S. Congress has introduced a bill, Virtual Currency Tax Fairness Act in a bid to reduce the tax obligations for everyday spenders of cryptocurrency. Reportedly, the bill seeks to wave taxes on the personal spending of cryptocurrencies. It could also eliminate the need to report taxes if the transaction would’ve amounted to crypto gains less than $200.
Furthermore, Coin Center, a U.S based research group has been working hand-in-hand with a group of U.S. lawmakers to make personal crypto spending non-taxable. Likewise, Representatives Suzan Delbene, Schweikert, Soto, and Emmer introduced the bill to make an amendment to the existing bill.
Cryptocurrencies are Classified as Commodity and Intangible Property
On the other hand, the U.S. Commodity Futures Trading Commission (CFTC) classifies cryptocurrencies as commodities. Whereas the Internal Revenue Service (IRS) classifies digital currencies as intangible property.
Nonetheless, the government requires tax each time a user spends cryptocurrency to purchase items. It goes contrary to fiat since tax is not levied for every dollar paid for the exchange of goods or services. The latter has, therefore, brought about the need to create a fair tax policy for everyday spenders in order to foster the adoption of this asset class.
Crypto Community’s Remarks on New Bill
Cryptocurrency enthusiast, The Moon, who made comments on Twitter said:
MASSIVE NEWS: U.S. Congress proposes that #Crypto transactions below $200 shall be FREE from taxes!!
This is HUGE for mass adoption!
— The Moon (@themooncarl) January 20, 2020
“Cryptocurrency transactions due to changes in exchange rates should not be included in an individual’s income. The previous sentence does not apply if the profit exceeds $200,” The Moon added as he replied a comment on his tweet.
Other members of the crypto space who made comments opined that the limit should be raised to $1,000. As such, taxes should only be levied on crypto gains above this threshold. There were, however, sentiments that the idea of paying tax on crypto gains should be wiped out entirely since it’s not easy to control/monitor a person’s transaction.