US Lawmakers Introduce Bill for IRS Review of Crypto Tax Exemption

Key Takeaways:

• Bipartisan US lawmakers introduced the PARITY Act to study crypto tax exemptions. 
• The bill directs the Treasury and IRS to examine relief for small crypto transactions. 
• Lawmakers aim to reduce compliance burdens while improving digital asset regulations. 

A bipartisan group of US lawmakers has introduced new legislation aimed at modernizing how the country taxes digital assets. The proposed bill is called the Digital Asset Protection, Accountability, Regulation, Innovation, Taxation, and Yields (PARITY) Act. It would direct the US Treasury Department and the Internal Revenue Service (IRS) to study the possibility of creating a de minimis tax exemption for cryptocurrency transactions. 

Republican Representative Max Miller said the US tax code has failed to keep pace with the rapid expansion of digital assets and financial technology innovation. He said in a statement, “As America continues to lead the world in innovation, our tax code has failed to keep pace with the rapid growth of digital assets and modern financial technology.”

Treasury Department and IRS to Study Tax Relief 

The bill does not immediately establish a tax exemption for small crypto payments. Instead, it requires the Treasury Department to provide interim guidance within 180 days on what relief could be offered under existing authority. The legislation also calls for a review of the compliance burden faced by taxpayers when reporting minor crypto transactions. 

According to crypto exchange Kraken, millions of reported transactions sent to the IRS were valued at less than $50, highlighting concerns over excessive reporting requirements for small purchases. If things go according to plan, small crypto payments may receive tax exemption.

Stablecoins and Market Regulations

The PARITY Act also retains provisions related to regulated payment stablecoins, treating certain digital dollars similarly to cash for tax purposes. Additionally, the proposal seeks to apply wash sale rules to cryptocurrency trading and preserve safe harbor protections for broker-based transactions. 

Democratic Representatives Steven Horsford and Suzan DelBene, along with Republican Representative Mike Carey, join Miller in introducing the legislation. With the CLARITY Act almost passed, the future of crypto is bright in the US.