US Congressman Matt Gaetz (R-FL) has put forth a bill that would allow American citizens to pay their federal income tax using Bitcoin. If the bill is passed, the US Secretary of the Treasury will establish a program to enable tax payments in Bitcoin.
Rep. Gaetz was inspired to propose this legislation after attending the inauguration of El Salvador’s president, Nayib Bukele. In 2021, El Salvador became the first country to adopt Bitcoin as a legal currency. Rep. Gaetz believes that his bill will modernize the current tax system and keep the US at the forefront of technological advancements.
He stated, “By allowing taxpayers to use Bitcoin for federal tax payments, we can encourage innovation, improve efficiency, and provide more flexibility to American citizens.”
If the bill becomes law, it will amend the Internal Revenue Code of 1986 to accommodate Bitcoin as a payment method for taxes. This aligns with former President Donald Trump’s promise to ensure that the future of cryptocurrency, including Bitcoin, is developed in the United States.
Rep. Gaetz’s bill also calls for regulations regarding the inclusion of cryptocurrencies in tax payments. The proposed legislation asks the Secretary to establish necessary regulations, such as converting Bitcoin payments to dollars upon receipt and applying fees similar to credit card payments. The bill also aims to ensure that tax matters can be resolved by the Secretary without the involvement of financial intermediaries.
It is worth noting that the Internal Revenue Service (IRS) already requires taxpayers to report income from crypto and digital assets. Furthermore, certain states in the US, such as New Jersey and Kentucky, have implemented their own regulations regarding crypto taxes. For example, Kentucky treats Bitcoin as a cash equivalent, while Arkansas and Missouri do not impose taxes on cryptocurrencies like Bitcoin.
Overall, Rep. Gaetz’s bill seeks to pave the way for Bitcoin to be used for federal tax payments, promoting technological innovation and offering greater flexibility to American taxpayers.
