Arizona is well on their way to being the first state in the United States to allow cryptocurrency to be directly used to pay taxes within their state.
Arizona laws requires all bills to pass three readings.
First SB 1091 passed the Arizona State Senate on Feb 8. House Ways and Means Committee approved the bill last month. The final step is for the state House of Representatives to vote on the bill.
The bill has had 2 notable changes along the way, first was expanding the number of altcoins that could be used for tax payments to include “LiteCoin or any other recognized cryptocurrency.”
Second it was also added to specify that the state government must convert all cryptocurrency payments into US dollars at “AT THE PREVAILING RATE WITHIN TWENTY-FOUR HOURS AFTER RECEIPT” after receipt.
Be it enacted by the Legislature of the State of Arizona:
Section 1. Section 43-505, Arizona Revised Statutes, is amended to read:
43-505. Tax payments made to department; order of crediting
A. The tax and any interest and penalties shall be paid to the department. Remittances may be in the form of EITHER:
1. A check payable to the department during such A time and under such regulations as the director may prescribe. If a check is not paid by the bank on which it is drawn, the taxpayer tendering the check shall remain IS liable for the payment of the tax and all interest and penalties as if he had THE CHECK WERE not tendered the check.
2. A PAYMENT GATEWAY, SUCH AS BITCOIN OR OTHER CRYPTOCURRENCY, USING ELECTRONIC PEER-TO-PEER SYSTEMS. THE DEPARTMENT SHALL CONVERT CRYPTOCURRENCY PAYMENTS TO UNITED STATES DOLLARS AT THE PREVAILING RATE WITHIN TWENTY-FOUR HOURS AFTER RECEIPT AND SHALL CREDIT THE TAXPAYER’S ACCOUNT WITH THE CONVERTED DOLLAR AMOUNT.
B. The department shall credit payments against a taxpayer’s unpaid tax liability before crediting payments against any interest or penalties.
The bill had previously been held up while the state passed HB 2417, a bill that recognized Blockchain signatures and the enforcement of smart contracts and HB 2603, which allows corporations to hold and share data on a distributed ledger.
Many have long since claimed one of the thing holding back cryptocurrency from mainstream adoption is the inability to pay taxes with it, so this may be the firsts major move to legitimizing cryptocurrency within the United States.
There is also a belief by some that this is nothing more than a means for governments to more easily be able to track users of cryptocurrencies to their wallet addresses, and there is much doubt as to whether the “recognized currencies” will ever include privacy coins such as Monero or Zcash.