Congressman Matt Gaetz (R-FL) has proposed a legislation to allow Americans pay their federal income tax using Bitcoin. If passed, the US Secretary of the Treasury would implement a program to allow payment of taxes using Bitcoin.
Per official statement, Rep. Gaetz was motivated to propose the bill after attending El Salvador president Nayib Bukele’s inaugural ceremony. In 2021, El Salvador became the first country to allow Bitcoin as a legal currency.
He noted that his bill would “modernize” the current tax system, ensuring US remains at the forefront of technological advancement.
“By enabling taxpayers to use Bitcoin for federal tax payments, we can promote innovation, increase efficiency, and offer more flexibility to American citizens.”
If enacted, the legislation would amend the Internal Revenue Code of 1986 to accommodate Bitcoin payment method.
Rep. Gaetz’s proposal to include cryptos into tax payments, comes in line with former president Donald Trump’s campaign pledge. Trump noted, he would “ensure that the future of crypto and the future of Bitcoin will be made in America.”
Rep. Gaetz’s Bill Calls for Regulation
The proposed legislation, submitted in the House of Representatives, has urged the Secretary to prescribe regulations that it sees necessary to include Bitcoin for tax payments.
The regulations include converting Bitcoin payments to dollars upon receipt, and fees following similar rules to credit card payments.
The bill also sought to ensure that “tax matters will be resolved by the Secretary, without the involvement of financial intermediaries.”
“In general, the Secretary is authorized to enter into contracts to obtain services related to receiving payment by Bitcoin.”
Earlier, the Internal Revenue Service (IRS) already mandated all taxpayers to report crypto and digital assets income.
Additionally, some of the states in the US including New Jersey and Kentucky have implemented their own crypto tax regulations. For instance, Kentucky treats Bitcoin as a cash equivalent. While, in states like Arkansas and Missouri, cryptos such as Bitcoin are not subject to tax.