Bill advancing de minimis tax exemption for crypto transactions returns to Congress

On February 3, Suzan Delbene (D-WA) and David Schweikert (R-AZ) re-introduced the Virtual Currency Tax Fairness Act. 

The bill would free cryptocurrency users of the need to report capital gains accrued on crypto that the user spends in a personal transaction as long as those gains would not exceed $200.

Currently, users of cryptocurrencies may need to report capital gains based on the value of a crypto token that they were using as a means of exchange rather than an investment. The IRS has not generally been pursuing cryptocurrency users for failure to report small transactions, but the overall lack of clarity surrounding tax reporting duties is a major issue facing crypto users, holders and traders. 

Co-sponsoring the bill were Schweikert’s co-chairs of the Blockchain Caucus, Darren Soto (D-FL) and Tom Emmer (R-MN). In a statement on the bill’s reintroduction, Emmer said “This common-sense bill will finally allow Americans to use their digital wallet as seamlessly as cash.”

The bill is identical to an earlier version that hit the congressional docket in January of 2020, but did not make it out of the House Ways and Means Committee during that Congress. Interestingly, Bill Foster (D-IL), the fourth co-chair of the Blockchain Caucus did not co-sponsor this more recent incarnation, despite putting his name on the 2020 version. 

Legislation relating to cryptocurrency has been slow to pick up steam in Congress, with almost nothing passing through the Senate. In the absence of statute, many crypto industry stakeholders say that regulatory agencies are overstepping their bounds.