A bill aimed at alleviating the tax burden of cryptocurrency investors was reintroduced today by U.S. Congressman Tom Emmer.
The so-called "Safe Harbor for Taxpayers with Forked Assets" bill attempts to bring tax clarity around so-called hard forks, when a cryptocurrency splits into two new separate blockchains.
The bill was first introduced by Emmer in 2018, where it eventually lost momentum in the U.S. House Committee on Ways and Means. Emmer said he would reintroduce the bill during CoinDesk's Consensus conference in May, and made comments that the new iteration could differ from the old version.
As the name implies, the bill will provide a "safe harbor" for taxpayers when their assets are forked, meaning they won't have to face penalties if they don't pay taxes on forked assets correctly. Currently, they can be considered undeclared income by tax agencies.
"Further it will restrict fines against individuals that attempt to report these assets until the IRS provides any type of guidance regarding the appropriate means of reporting them," per a press release highlighting the original 2018 bill.
The reintroduced bill aims to safeguard crypto users due to a lack of clarity from the IRS, and could remedy the situation, according to James Foust, a senior research fellow at Coin Center.
“It is unfortunate that the IRS’s inaction has made this bill necessary, but we’re grateful that Rep. Emmer is introducing legislation to protect American taxpayers against tax penalties caused by the lack of IRS guidance on these issues,” said Foust.
The bill joins a number of pieces of legislation being considered in the U.S., such as the Token Taxonomy Act, which aims to categorically define which tokens should fall under securities laws on a federal level. Additionally, a number of state bills addressing crypto concerns are being considered, such as the Regulation of Virtual-Currency Businesses Act, which has been introduced in a number of state assemblies. The law would create a statutory framework for companies engaging in "virtual-currency business activity."
Correction: This post has been updated to correct that the bill won't eliminate taxes on forks, but would rather protect crypto investors who incorrectly pay taxes on forks.