A bipartisan group of lawmakers on Wednesday introduced a revised crypto tax bill that aims to update the tax code to better address cryptocurrency use cases and, if signed into law, would direct the IRS to analyze the effect de minimis exemptions could have.
Congressmen Steven Horsford (D-N.V.), Max Miller (R-Ohio), Suzan DelBene (D-Wash.), and Mike Carey (R-Ohio) reintroduced the Digital Asset Protection, Accountability, Regulation, Innovation, Taxation, and Returns Act, also known as the Parity Act, which Horsford and Miller had previously pushed several times. The new language comes a week after lawmakers reportedly met to discuss cryptocurrency tax reform.
The new version of the bill requires that “regulated payment stablecoins” do not generate profits or losses unless the cost basis is less than 99% of the exchange value of the stablecoin, and also creates a safe harbor for trading through brokers or in taxpayer accounts, defines how so-called “wash sale” rules could apply to digital assets, and addresses how digital assets are obtained by acting as validators.
The bill also directs the IRS to review what type of tax burden cryptocurrency holders face when it comes to “small digital asset transactions” and how many transactions worth less than $200 are captured under existing law. This review should include the IRS’ needs if there were a de minimis exemption (i.e., an exception for activities that the law should consider too small to care about) for crypto transactions, as well as whether and how such an exemption could be abused.
The cryptocurrency industry has long argued that freeing taxpayers from the burden of having to file and report taxes on small transactions would make it easier to use cryptocurrency as a payment tool for small items like a cup of coffee.
The bill is intended to be just a first step toward broader cryptocurrency tax reform, Horsford said at CoinDesk’s Consensus Miami conference earlier this month.
“In fact, I think taxes are the basis. Why? Because it is tax policy that will determine how these digital assets can be used in our financial system in the first place. And at a time when our federal tax code is outdated, it does not take into account the modernization of digital assets,” he said.
“For example, none of the current regulatory policy frameworks tell a consumer, an institution or a builder what happens to their taxes when they sell a digital asset, earn a reward for staking, lend cryptocurrency on the US platform or make a charitable contribution in bitcoins,” the lawmaker said. “Those are fiscal issues. And they remain completely unresolved.”
