A bipartisan group of lawmakers on Wednesday introduced a revised crypto tax law that aims to update the tax code to better address cases of crypto use and would, if signed into law, ask the IRS to analyze the effect de minimis exemptions can have.
Congressmen Steven Horsford (DN.V.), Max Miller (R-Ohio), Suzan DelBene (D-Wash.) and Mike Carey (R-Ohio) reintroduced the Digital Asset Protection, Accountability, Regulation, Innovation, Taxation and Yield Act, also known as the Parity Act, which Horsford and Miller had previously pushed a few times. The new language comes a week after lawmakers reportedly met to discuss crypto tax reform.
The new version of the bill calls for “regulated payment stablecoins” to incur no gain or loss unless the cost basis is less than 99% of the redemption value of the stablecoin, and it also creates a safe harbor for trading through brokers or on taxpayer accounts, defines how so-called “wash sale” rules can apply to digital assets and earns how digital assets act as an earner.
The bill also directs the IRS to review what kind of tax burden crypto holders face when it comes to “small digital asset transactions” and how many transactions worth less than $200 are caught under existing law. This review should include the IRS’s needs if there was a de minimis exemption — meaning an exclusion of activity that the law should consider too small to be concerned about — for crypto transactions, as well as whether and how such an exemption could be abused.
The crypto industry has long argued that freeing taxpayers from the burden of having to report and remit taxes on small transactions would make it easier to use crypto as a payment tool for small things like a cup of coffee.
The bill is meant to be just a first step toward broader crypto tax reform, Horsford said at CoinDesk’s Consensus Miami conference earlier this month.
“I actually think that tax is the foundation. Why? Because it is tax policy that will determine number one how these digital assets can be used in our economic system. And at a time when our federal tax code is outdated, it does not take into account the modernization of digital assets,” he said.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 developer what happens to their taxes when they sell a digital asset, earn stake rewards, borrow crypto on the US platform or make a charitable contribution in bitcoin,” the lawmaker said “These are tax issues. And they remain completely unresolved.”
