US House Lawmakers Introduce PARITY Act, Seek IRS Guidance on Small Crypto Transaction Tax Relief Within 180 Days

US House lawmakers have introduced a bill that would require the Treasury Department and the Internal Revenue Service to examine tax relief for small cryptocurrency transactions.

Cointelegraph reported on May 20 that the bill was introduced in the House on May 19. The measure would direct the Treasury Department and the IRS to study how to implement a tax exemption for small crypto transactions. It is titled the Digital Asset Protection, Responsibility, Innovation and Taxation Act, or PARITY Act.

The legislation was introduced after a discussion draft was released in March. Its sponsors are Republican Representatives Max Miller and Mike Carey and Democratic Representatives Steven Horsford and Suzan DelBene. Miller said the US tax code has failed to keep pace with the rapid growth of digital assets and modern financial technology even as the country leads in innovation.

The bill does not immediately create a tax exemption for small crypto transactions. Instead, it would require the Treasury Department and the IRS to review the issue. Under the measure, the Treasury Department, which oversees the IRS, would have to issue preliminary guidance within 180 days on steps to reduce the tax burden on small transactions.

The bill also calls for a review of the administrative and technical requirements the IRS would need if such an exemption is adopted. It would also require an assessment of potential abuse and possible safeguards.

The industry has long pushed for an exception to taxes on small crypto transactions. Cointelegraph reported that US crypto exchange Kraken submitted about 56 million tax forms to the IRS last month. About one-third involved transactions worth less than $1, while transactions below $50 accounted for more than 75% of the total.