Two Rocky Mountain States Greenlight Crypto Tax Payment Programs
A couple of US states are following up with programs that allow people to pay taxes in cryptocurrency.
The revenue departments of Colorado and Utah are introducing programs that will enable individuals and businesses to pay taxes on virtual currencies, including Bitcoin, Ethereum and Dogecoin. Implementation is planned over the next few months.
Utah and Colorado accept cryptocurrencies for taxes
The Utah state legislature passed HB 456, ordering state and local governments to accept cryptocurrencies for payment of taxes as of January 1, 2023. The law also requires the Division of Finance to contract with a third party, such as a cryptocurrency payment gateway, for an appropriate way to convert the cryptocurrency into dollars before the funds are transferred.
Similarly, in Colorado, crypto attorney Jared Polis instructed the Department of Taxation to develop a program to accept crypto tax transfers. Although they are still working on some of the details, the government hopes to have a special crypto payment portal up and running that taxpayers can use by September.
Colorado also plans to hire a third party to immediately exchange the cryptocurrency for US dollars. “We are working to make it similar to how we accept credit cards and other forms of payment,” said department spokeswoman Meghan Tanis. “The state does not intend to keep a balance of cryptocurrencies.”
Declining demand
While the pair of Rocky Mountain states were the only two to follow up on such legislation, around 37 states considered bills that affected some aspects of cryptocurrency during the 2022 legislative session, according to Heather Morton, a policy analyst at the National Conference of State Legislatures. Among them, Arizona, California, Hawaii, Illinois, Louisiana, New York and Oklahoma had considered bills authorizing authorities to accept crypto.
Although these half a dozen states have considered following the lead of Colorado and Utah, the two western states appear to be extreme, as the sector’s sales pose some logistical barriers prior to the launch of the program.
For example, Utah’s program will prevent it from risking government money during the conversion of cryptocurrency into US dollars. In addition, finding a provider to absorb the risk can be challenging, said John Valentine, chairman of the Utah State Tax Commission.
“I do not know what they will find when they enter the marketplace,” Valentine said. “Markets need to be very effective at scoring their risks. With the uncertainty in the cryptocurrency markets right now, I think it’s going to be harder to find a third-party provider than when it was more stable a year ago.”
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