Rep. Matt Gaetz Proposes Bill to Accept Bitcoin for Federal Tax Payments

Congressman Matt Gaetz (R-FL) has introduced legislation that would permit Americans to pay their federal income taxes using Bitcoin. If passed, this bill would direct the US Secretary of the Treasury to establish a program facilitating tax payments in Bitcoin.

Inspiration from El Salvador

Rep. Gaetz’s proposal follows his attendance at El Salvador President Nayib Bukele’s inaugural ceremony. In 2021, El Salvador became the first country to adopt Bitcoin as legal tender. Inspired by this move, Gaetz aims to modernize the US tax system and maintain the country’s leadership in technological advancements.

“By enabling taxpayers to use Bitcoin for federal tax payments, we can promote innovation, increase efficiency, and offer more flexibility to American citizens,” Gaetz stated.

The legislation seeks to amend the Internal Revenue Code of 1986 to incorporate Bitcoin as a tax payment method.

Alignment with Trump’s Crypto Vision

Gaetz’s initiative aligns with former President Donald Trump’s campaign promise to support the crypto industry. Trump emphasized that he would “ensure that the future of crypto and the future of Bitcoin will be made in America.”

Regulatory Framework

The proposed bill requires the Secretary of the Treasury to establish necessary regulations for accepting Bitcoin payments. This includes converting Bitcoin to dollars upon receipt and applying fees similar to those for credit card payments. The bill ensures that tax matters will be handled directly by the Secretary without involving financial intermediaries.

“The Secretary is authorized to enter into contracts to obtain services related to receiving payment by Bitcoin,” the bill states.

Current Crypto Tax Landscape

The Internal Revenue Service (IRS) already mandates reporting of crypto and digital asset income. Additionally, several states, including New Jersey and Kentucky, have implemented their own crypto tax regulations. For example, Kentucky treats Bitcoin as a cash equivalent, while states like Arkansas and Missouri do not tax cryptocurrencies such as Bitcoin.