Is it possible to pay state taxes by using crypto? This state wants to make that a reality.
Colorado Governor Jared Polis hopes to one day allow Colorado residents to pay their state taxes using cryptocurrency.
Polis, a longtime supporter of digital currencies, was the first political candidate to accept Bitcoin campaign donations in 2014. He recently spoke at the virtual Consensus 2021 event organized by CoinDesk. There, he stated he'd "be thrilled to be the first state to let you pay your taxes in a variety of cryptos."
He also spoke about his state's involvement in technology, noting, "Colorado is and will be the center for blockchain innovation in the United States, attracting investments and good jobs and innovators in infrastructure, digital identity, [and] individual data security in the private and public sector."
Polis didn't explain in detail how he hoped to make this a reality. For now, he mentioned that he would need to speak with the Director of Revenue, Mark Ferrandino, to learn more about the possibility.
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Have other states allowed crypto tax payments in the past?
While no states currently allow for state taxes to be paid in crypto, the idea isn't new. Ohio first allowed Bitcoin to be used to pay tax bills in 2018. This was made possible by using BitPay, a third-party payment service provider.
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However, this service was only available to business owners -- not individual taxpayers. And it was a short-lived program. In 2019, Ohio treasurer Robert Sprague suspended this service to look into the legalities. Whether the program will start up again in the future or if the program will allow individuals to pay their taxes with cryptocurrency remains uncertain.
Other states have also considered similar programs but never made those programs a reality. The lack of state legislation to support these measures likely stands in the way.
Will paying with crypto become the norm?
While you can't pay your state taxes with crypto right now, there are other ways to use your crypto to make purchases. Some big brands like Overstock, Microsoft, and AT&T accept crypto payments.
Recently, Paypal announced that U.S users could pay with crypto. Using its Crypto Checkout service, anyone with cryptocurrency holdings in the U.S. can pay for purchases with Bitcoin, Ethereum, Bitcoin Cash, or Litecoin. As one of the most popular online payment solutions, that's a big deal.
It'll be interesting to see how more businesses adapt to the rise of digital currencies and whether more companies will allow customers to pay for products and services with cryptocurrency. Will states begin to adopt legislation to allow for cryptocurrency to be used to pay taxes? We will have to wait and see when or if that might happen.
If you're wondering "what is cryptocurrency?" make sure to learn more about the basics before you invest.
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