According to Cointelegraph the Token Taxonomy Act (TTA) will “create a de minimis tax exemption for crypto transactions under $600”, according to Jerry Brito, the executive director of Coin Center, who was speaking at Consensys 2019 on 13th May.
This means that if a crypto owner experiences a capital gain of up to $600 on their crypto, then that owner is not required to report the gain to the Internal Revenue Service (IRS), the US tax authority.
Brito told the audience that this is similar to the way in which small gains on foreign currencies were treated prior to a de minimis proviso that was introduced in the 1990s by Congress. Prior to this, if someone purchased foreign currency to take on a short vacation in another country, any capital gains experienced over the course of holding that currency would technically have to be reported.
However, he added that people could still technically be required to declare capital gains when using crypto to buy plane tickets or other consumer items, or even a smart contract, for which a small amount of ETH is needed as payment. But he did note that regulatory authorities could decide to require reporting of small expenditures.
The TTA, if passed, would also exclude cryptocurrency from classification as a security and provide regulatory certainty for the compliance and enforcement of crypto statutes.