Congressman Matt Gaetz (R-Fla.) introduced legislation on June 25 that would require the IRS to start accepting federal tax payments in Bitcoin.
Gaetz highlighted the potential benefits of this “bold move,” saying the bill will ensure the U.S. remains at the forefront of technological advancements.
The congressman said:
“My groundbreaking legislation will modernize our tax system by allowing federal income taxes to be paid with Bitcoin. This is a bold step towards a future where digital currencies play a crucial role in our financial system.”
Taxes with Bitcoin
The bill proposes that taxpayers be allowed to use Bitcoin for federal tax payments, which Gaetz said would “promote innovation, increase efficiency, and provide more flexibility for American citizens.”
If the legislation passes, Treasury Secretary Janet Yellen would be tasked with developing a plan to accept Bitcoin as a legitimate form of payment for federal tax payments. Yellen has traditionally been a critic of Bitcoin and has opposed crypto.
The congressman pointed to his recent visit to El Salvador, the first country to adopt Bitcoin as legal tender in 2021, as a key influence on his decision to introduce the bill. He said Bitcoin has helped improve economic stability and create jobs in Central America.
The congressman’s proposal marks a significant shift in the approach to integrating digital currencies into the mainstream financial system, and reflects a growing recognition of their potential to transform economic practices.
Gaetz’s proposal follows similar actions by several US states. Colorado became the first to approve crypto payments for taxes in 2022, while Louisiana recently passed legislation protecting the right to self-custody and cryptocurrency mining.
Meanwhile, Texas, Utah, New Jersey and Kentucky are moving toward similar policies.
Broader regulatory efforts
The introduction of the bill comes amid ongoing debates in Congress over how to regulate the fast-growing crypto industry.
The House of Representatives recently passed FIT21, a bill that will give the Securities and Exchange Commission (SEC) or the Commodity Futures Trading Commission (CFTC) full oversight of crypto trading.
The bill also aims to establish a clear method for classifying whether a digital asset should be considered a commodity or a security, which is one of the major hurdles to the growth of the sector in the US.
The bill passed the House of Representatives with strong bipartisan support and is expected to receive similar support in the Senate, which has not yet given the legislation the green light.