Bitcoin fans contend that their currency is just as valid as any other money. But they've not had a lot of luck in convincing most people of that.
Cryptocurrency aficionados thought they had taken a major step toward wider acceptance in February when the Arizona Senate approved a bill that would have allowed for, beginning in 2020, the payment of state income taxes in bitcoin or other digital currency approved by the Arizona Department of Revenue (ADoR).
Four months later, that's no longer a possibility.
Crypto pay stripped from bill: When Senate Bill 1091 went to the Arizona House for consideration, those lawmakers made some changes. Like removing the payment play.
The amended bill sent to the governor on May 4 for signature states that:
"All remittances of taxes imposed by this article shall be made by bank draft, check, cashier's check, money order, cash or electronic funds transfer to the department, which shall issue receipts therefor to the taxpayers, but no remittance other than cash shall be final discharge of liability for the tax levied by this article until it has been paid in cash to the department."
What happened to the Senate-approved proposal to let Grand Canyon State taxpayers settle their state tax bills with cryptocurrency, which the state then would then convert to U.S. dollars within 24 hours of receipt?
House members excised that portion of the bill, opting instead to simply direct the ADoR to consider accepting alternative forms, such as cryptocurrency, of payment.
Rather than fight for its original pro-cryptocurrency stance, the Senate backed off when it became clear that the idea faced stiff opposition from many wary lawmakers.
Plus, the legislative session was winding down.
Similar situation in Georgia: The Peach State also looked into letting its taxpayers use cryptocurrency to pay state tax bills.
That effort, however, didn't get as far in the legislative process as did Arizona's bill. In fact, the Georgia proposal was introduced way late in that state's 2018 session and ran into technical time constraints that hampered its consideration.
Back in Arizona, just studying: Back in Arizona, though, cryptocurrency tax payments did a least get a somewhat fuller airing even if the end result is that ADoR will, for now, just look into cryptocurrency payments.
And for as long as the tax office deems necessary. The amended legislative language that made it into the final bill now awaiting enactment reads:
"The [tax] department shall study whether a taxpayer may pay the taxpayer's income tax liability by using a payment gateway, such as Bitcoin, Litecoin or any other cryptocurrency that uses electronic peer‑to-peer systems. The department shall study the conversion of cryptocurrency payments to United States dollars at the prevailing rate after receipt and shall study the process of crediting the taxpayer's account with the converted dollar amount actually received less any fees or costs incurred by the department for conversion."
The one bit of hope cryptocurrency advocates can cling to is that Arizona is — or will one day — officially looking into the tax payment option. It's at least a starting point.
You also might find these items of interest:
- Bitcoin adds twist to annual tax filing checklist
- Countries' takes on Bitcoin and taxes vary widely
- Hacker wanted $1 million in Bitcoin as Romney tax returns ransom