Stockman introduces bill to impose sales taxes on ‘virtual’ bitcoin

A new bill from Rep. Steve Stockman (R-Texas) would call for sales taxes to be paid on transactions using bitcoin.

The Virtual Currency Tax Reform Act would change the IRS’s treatment of the virtual currency, of which Stockman has been a strong supporter.

{mosads}Late last month, the IRS declared that bitcoins should be treated like property in the eyes of the federal government, which would make profits earned off trades of the money subject to capital gains taxes. Stockman’s bill would change that determination and treat bitcoin like other forms of currency.  

“This is a nascent industry,” he said in a statement on Monday. “Along with 3-D printers and nanotubes, cryptocurrency is the future. We need to encourage it, not discourage it. There is risk associated with every budding industry in America.”

Bitcoins only exist virtually but can be traded for cash online or used to buy goods and services at some stores.

The currency also has been used by money launderers to hide evidence of deals for drugs and other illicit goods. The popular Mt. Gox exchange also went spectacularly bust earlier this year, taking hundreds of millions of dollars with it.

Supporters, however, say that the technology behind bitcoin has the potential to revolutionize the way people pay for things in an increasingly global world.

Stockman has long been a backer, and began accepting bitcoins for his failed bid to unseat Sen. John Cornyn (R-Texas) earlier this year, even though the Federal Election Commission had not formally approved using the virtual money for campaign contributions.