TLDR
- Rep. Matt Gaetz introduced a bill to allow federal income tax payments in Bitcoin.
- The bill would require the U.S. Treasury to set up a program for Bitcoin tax payments.
- Colorado already allows crypto for tax payments at the state level.
- This comes amid increased interest in crypto from politicians and regulators.
- The bill aims to promote innovation and keep the U.S. at the forefront of digital currency adoption.
Florida Republican Representative Matt Gaetz has introduced a bill that would allow Americans to pay their federal income taxes using Bitcoin.
The bill, introduced on June 25, 2024, would require the U.S. Secretary of the Treasury to establish a program enabling federal income tax payments via Bitcoin. Gaetz described his proposal as “groundbreaking legislation” that would “modernize our tax system.”
“By enabling taxpayers to use Bitcoin for federal tax payments, we can promote innovation, increase efficiency, and offer more flexibility to American citizens,”
Gaetz stated.
He further emphasized that this move represents “a bold step toward a future where digital currencies play a vital role in our financial system, ensuring that the U.S. remains at the forefront of technological advancement.”
Gaetz cited his recent visit to El Salvador, which became the first country to adopt Bitcoin as legal tender in 2021, as inspiration for the bill. If passed, the legislation would amend the Internal Revenue Code of 1986, directing the Treasury to create a plan for accepting Bitcoin as a form of tax payment.
The bill outlines specific requirements for the Treasury, including establishing rules for accepting Bitcoin, determining when payments are considered received, and immediately converting Bitcoin payments to their dollar value. It also addresses guidelines for managing related non-tax issues, contracts, fees, and liabilities.
While this would be a first at the federal level, some U.S. states have already moved in this direction. Colorado became the first state to accept cryptocurrency for tax payments in September 2022, allowing it for various taxes including business income tax and individual tax. Utah, New Jersey, and Kentucky have also taken steps toward approving such payments.
The introduction of this bill comes at a time when cryptocurrency is gaining increased attention from both politicians and regulators. The U.S. House of Representatives recently passed the Financial Innovation and Technology for the 21st Century Act (FIT21), a regulatory framework bill for the crypto industry. However, this bill faces an uncertain future in the Senate.
Lawmakers are also working on stablecoin legislation, with efforts led by Senators Kirsten Gillibrand, Cynthia Lummis, and Representatives Patrick McHenry and Maxine Waters. These legislative efforts reflect the growing recognition of cryptocurrency’s role in the financial system and the need for clear regulatory guidelines.
The cryptocurrency industry has faced challenges, including instances of fraud and market instability. SEC Chair Gary Gensler has expressed concerns about the industry’s compliance with existing regulations.
Despite these challenges, interest in cryptocurrency among politicians continues to grow. Presidential candidates Donald Trump and Robert F. Kennedy Jr. are accepting Bitcoin campaign contributions, and there are indications that the Biden campaign may follow suit.
