The U.S. Senate’s Committee on Finance has reportedly added an amendment to the Tax Cuts and Jobs Act that would exempt cryptocurrency miners from new taxation measures designed to prevent individuals from operating as pass-through businesses.
The bill is currently being debated by the U.S. Congress, with a decision expected in soon.
It is understood that the U.S. Senate Committee on Finance approved amendments to a bill proposed by a Republican Senator, one of which would exempt cryptocurrency mining from measures designed to prevent individuals from avoiding taxation through pass-through businesses like limited liability companies.
The bill would bring digital currency “into parity with other industry practices” by clarifying that income from mining is to be considered earned income for the purpose of calculating payroll tax, and would extend this clarification to individuals working in the industry.
A second amendment added would mean those who receive cryptocurrency as payment will not be treated as operators of a trade or business if they sell their cryptocurrency (including at a loss) in exchange for other property.
These provisions will provide clarity for taxpayers who monetary transactions solely in virtual currencies and protect the U.S. Treasury from revenue losses.
Cryptocurrency Isn’t Really Money
No, don’t stone me, yet. Those are not my words. It is what the Internal Revenue Service Holds. Perhaps that makes it crystal clear why they wouldn’t fall under the relevant income tax laws.
When Bitcoins are used like any other currency, the officials say, —the sale of goods or services for Bitcoins—the gain or loss would be reported as regular on- or off-market monetary gains or losses.
The U.S. House of Representatives voted in favor of a bill proposed by Congressman Kevin Brady, the Chairman for the House Committee on Ways and Means, last week establishing as separate tax rules for virtual currencies like bitcoin and other “like-kind” property under Section 30104 of Title 26, Subtitle F of the United States Code.
The vote came several weeks after the Internal Revenue Service (IRS) issued guidance indicating that “virtual currency is treated as property [as opposed to a form of currency],” and therefore general tax principles applicable to property transactions should be followed by all parties involved in virtual currencies.
In what has been considered to be a significant move, the U.S. Securities and Exchange Commission (SEC) also earlier announced that it would begin reviewing its policy on cryptocurrencies such as bitcoin to determine if current regulations should remain in place or be adjusted for certain types of digital assets and initial coin offerings (ICOs).
Yet Another Amendment
Well, looks the crypto market has gathered itself a huge following in the senate than you’d ever think of. But, don’t take my word for it, the recent move by the crypto supporters in the Senate to amend the Bipartisan bill should speak louder.
But, what does that have to do with the crypto market? Good question. Amending the bill means clearing miners and crypto service providers from following the new tax-reporting rules imposed on brokers.
Just so we are clear – a broker, according to the new amendment, would be someone conducting transactions on exchanges for customers to trade digital assets.
Get what that means? Stakers, minors, and digital assets hardware and software sellers won’t be required to report their activities of that of their customers. Developers creating digital assets also won’t be monitored when dealing with users who aren’t their customers.
In case you were wondering, the amendment saw the light of the day, thanks to Ron Wayden, the Oregon democratic senator, Pennsylvania’s Pat Toomeyn, and the vocal Cynthia Lummis of Wyoming.
What more goodies do we expect?
The changes could lead to the bill raising to $5.2 billion less than anticipated by insiders, according to a recent report from Politico citing sensitive information that was leaked by someone with knowledge of how much Congress expected it would raise in revenue if they passed their original legislation packages last year
The new changes are purported to reduce federal taxes for some people based on what is not included and may cause an increase for others because of who will be left out as well as other provisions being tweaked or changed.
The Republican-led Senate sought ways Wednesday night that would reduce revenue by about $1 trillion over 10 years and still meet their goal for tax cuts.
Over the next week, it is speculated that Congress will be voting on a controversial legislative amendment. With some legislators hesitant to vote for such amendments and others fighting hard in favor of its passage, this issue has divided Americans everywhere!