Rep. Matt Gaetz (R-Fla.) has introduced legislation to force the IRS to accept Bitcoin as payment for federal income taxes.
Gaetz says he sees the decentralized digital currency as a method to promote financial stability and job creation. He pointed to what he considers a success in El Salvador. The Central American county adopted Bitcoin as legal tender in 2021.
He came up with the tax-payment idea following the success El Salvador has had with Bitcoin and the recent boom in crypto currency.
"My groundbreaking legislation will modernize our tax system," Gaetz says. "By enabling taxpayers to use Bitcoin for federal tax payments, we can promote innovation, increase efficiency, and offer more flexibility to American citizens."
The proposed legislation specifically names bitcoin which means other cryptocurrencies would not be allowed to be used.
One potential issue is that the prices of crypto fluctuate dramatically, which could make the exact value of Bitcoin difficult to accurately determine at the time of filing a tax return.
Right now, digital assets like crypto are considered property and not currency. the IRS requires taxes on the profits when digital assets are sold but they can't be paid with crypto.
Gaetz also recently introduced a bill that would eliminate federal taxes on tip income after Donald Trump suggested the idea at a campaign rally.
