Ohio to Accept Tax Payments in Crypto — Setting the Standard for Future?

In what is being hailed as a first in America, Ohio’s State Treasurer Josh Mandel has made it possible for businesses to pay taxes using Bitcoin.

In the coming weeks, business owners in the state will be able to register and settle their tax liabilities online, with payments to be processes by cryptocurrency payment service provider BitPay.

Businesses will be able to pay 23 different taxes using BTC through an online portal that has been set up by the state treasury office. As it stands, individuals will not be able to use the service to pay private taxes.

The Ohio Treasurer has made it clear that it will not actually hold any Bitcoin. The cryptocurrency will be immediately converted to U.S. Dollars after payments have been made to BitPay. Businesses of any size will be able to make use of the payment service.

Reasons for the move

The Ohio Treasurer has stated that the move is one to provide more options for state businesses and residents to interact with the state government.

Mandel has been somewhat of a pioneer in leveraging emerging technologies into state systems and offerings. In 2014, he launched OhioCheckbook.com, which put all of the Ohio state government spending information online and accessible to the public.

The move saw the state rated number one for government transparency, according to research from the U.S. Public Interest Research Group.

This latest move is in the hopes of making the state a leader in blockchain technology development and adoption, as Mandel told Cointelegraph in an interview this week. Firstly, the state wants to offer taxpayers more options when paying taxes:

“Secondly, to project to the rest of the country and the world that the state of Ohio is a leader in blockchain technology. I believe if we’re going to grow our technology economy here in Ohio, we have to first be a leader in technology.”

Mandel added that he had been a crypto enthusiast for a few years and that this is just part of a process of inspiring wider adoption of cryptocurrency and blockchain technology around the country:

“Here in the United States, states are the laboratories for democracy, and I think this is a perfect illustration of this concept — where this idea is beginning at a state level in Ohio, but the ultimate goal is to inspire the federal government to follow suit.”

Longevity of the project

Mandel’s term as Ohio Treasurer is set to end in January 2019, but he remains confident that the move will continue to operate once he leaves his post.

It has been reported that Mandel has discussed this with his elected successor, Republican Representative Robert Sprague, and Mandel confirmed to Cointelegraph that they’d discussed the matter:

“I’ve spoken with him about it, he and I are friends and allies, and I am confident that it will continue.”

Having launched just this week, phase one only allows businesses in Ohio to be able to pay taxes using cryptocurrency. But as Mandel explains, this is just the first step of some ambitious plans to accept different cryptocurrencies and offer the service to individual taxpayers.

“In the next phase of Ohiocrypto.com, we hope to expand the initiative to allow individuals to pay their taxes in cryptocurrency and expand beyond Bitcoin to include other cryptocurrencies.”

Given the infancy of the project, Mandel was reluctant to speculate on a given timeframe for the role out of further improvements.

“As with any initiative that is brand new and has never been done in America, it’s important that we take it slow and be prudent and thoughtful. We’re going to take the process slowly, and develop and expand it on what we believe to be a prudent timeline.”

Mandel also explained that the decision to convert Bitcoin straight to fiat currency was taken after extensive research by his team.

“When you’re dealing with taxpayers’ money, the variables that are most important are safety and security of the tax money. Every decision we make in the Ohio Treasury office is driven by this.”

BitPay CEO Stephen Paire told Cointelegraph that the initiative is an important one for blockchain-based and cryptocurrency-focused businesses that could make effective use of the payment option:

“One of the things we do is talk to all the different companies in the blockchain and cryptocurrency industry and find out who their vendors are. We then talk to them and get them signed up with BitPay, and that enables companies in our industry to be able to pay their bills with the technology they’re building the infrastructure for. Obviously, all these companies have to pay taxes, so it just makes a lot of sense for all those companies to have the ability to pay their taxes with cryptocurrency.”

Setting a new precedent

Ohio is the first state in America to actually launch this new method of payment, but it is not the first to have tried.

Other U.S. states have tried to pass bills that would allow taxes to be paid using cryptocurrency. However, these bills have been stopped in their tracks by state lawmakers.

In May 2018, Arizona’s House of Representatives passed a bill that would enable citizens to pay taxes using cryptocurrency. Despite that fact, the bill has yet to come into effect due to amendments in the fine print.

The revision called for a study into the possibility of these alternative payment forms, but it has not been made clear when this will be carried out.

Similarly, Georgia looked to pass a bill in February that would allow cryptocurrencies to be used as a payment option for state taxes and licenses. However, the bill “died in committee,” according to a progress update on Legiscan. Illinois is also in the process of considering a similar bill.

Despite these failures, other U.S. states have passed various bills that have helped the adoption cryptocurrencies and blockchain technology which bodes well for the future of adoption.

Wyoming was able to pass a number of bills that saw cryptocurrencies classified as a new asset class in the state in March 2018.

Things could get complicated

The move does have some interesting implications for businesses that will look to take advantage of the new payment method.

A number of countries around the world have enforced taxes on cryptocurrency gains and this will be something to consider for those entities that will pay their taxes using Bitcoin.

As international tax attorney Selva Ozelli pointed out to Cointelegraph, businesses will have to grapple with additional processes when holding and using cryptocurrencies:

“Businesses will need to keep track of the basis, holding period, price of cryptocurrencies; they will need to learn how to hedge the price swings between USD and cryptocurrencies; they will need to comply with FinCEN money laundering and additional laws. They will have increased record keeping requirements and more sophisticated treasury functions — just like multinational companies. On the other hand, these enhanced compliance requirements will encourage blockchain companies to design systems to simplify such functions for businesses going forward and fuel growth in blockchain technology-related jobs.”

Dr. Niklas Schmidt, a partner at the law firm Wolf Theiss, also made a similar observation, especially for businesses that have held onto their Bitcoin for some time:

“Payment of taxes in cryptocurrency creates an interesting problem: If a taxpayer has purchased, say, Bitcoin some time ago and has an unrealized gain, in most jurisdictions, discharging a liability with such an appreciated asset will lead to a taxation of the gain. In other words, payment of your taxes in Bitcoin may again trigger tax.”

Another factor to consider is that businesses in the state will still be liable to pay federal tax, which can only be done with fiat currency, according to Schmidt.

A sign of things to come

This tax payment option is not entirely new, but considering the impact it may have in Ohio and America, it could potentially spread to more countries.

While these moves may have failed in other American states, Ozelli believes that the success of such initiatives in other countries proves that there is an interest in this option being available.

“In the U.S., other states around the country also considered accepting cryptocurrencies for taxes, but those initiatives in Arizona, Georgia and Illinois never got past state legislatures. The Swiss municipality of Chiasso allowed residents to pay their taxes in Bitcoin starting in January of 2018, while Seminole County, Florida, became the very first county in the U.S. to announce accepting Bitcoin to pay their taxes in May of 2018.”

Schmidt also told Cointelegraph that Zug, a municipality in Switzerland, also accepts tax payments in Bitcoin. With more than a few places around the world actively offering this payment option, it does seem to bode well for this becoming more commonplace.

Cryptocurrency investment advisor Anthony Pompliano made an astute observation in his daily newsletter, citing milestones like this as an important use-case example for cryptocurrency going forward:

“Historically, Bitcoin detractors have said the digital asset couldn’t be a currency because you can’t pay your taxes with it. That is obviously no longer true now. This is another data point that supports the legitimization of the world’s most popular decentralized digital currency.”

Governmental agencies and financial institutions are slowly seeing the value in incorporating cryptocurrencies into certain processes. Every step in this direction is a positive one, especially when the focus is on the current state of the markets.

Mandel hopes that his work with the Treasury will play a part in influencing other states to follow in their footsteps and eventually take hold at a national level:

“I hope what we’re doing in Ohio will inspire states around the country to allow their taxpayers to pay in cryptocurrency and ultimately inspire the federal government to pay federal taxes with crypto as well.”

Author: Cointelegraph By Gareth Jenkinson

Source link

Related posts

26 Thoughts to “Ohio to Accept Tax Payments in Crypto — Setting the Standard for Future?”

  1. gamefly free trial

    Heya i am for the first time here. I came across this board and I find It really useful & it helped
    me out much. I hope to give something back and help others like you helped me.

  2. minecraft free download pc

    Attractive element of content. I simply stumbled upon your weblog
    and in accession capital to say that I get in fact enjoyed account your weblog posts.

    Anyway I will be subscribing in your feeds or even I fulfillment you get entry
    to constantly fast.

  3. minecraft download for free

    When someone writes an paragraph he/she keeps the image of a user in his/her brain that how a user can understand it.

    Thus that’s why this paragraph is perfect.

  4. g

    Thank you for sharing your thoughts. I truly appreciate your efforts and I am waiting for your next post thank you
    once again.

  5. Stewart Plamondon

    This is a excellent blog, would you be involved in doing an interview about just how you designed it? If so e-mail me!

  6. minecraft free download pc

    I am regular visitor, how are you everybody? This piece of writing posted at
    this website is in fact pleasant.

  7. gamefly free trial

    Just want to say your article is as astounding.
    The clearness in your put up is simply spectacular and
    that i could think you’re knowledgeable on this subject.
    Fine together with your permission let me to seize your
    feed to keep up to date with impending post. Thank you a million and please carry on the rewarding work.

  8. gamefly free trial

    Hello, i read your blog occasionally and i own a similar one
    and i was just curious if you get a lot of spam responses?

    If so how do you protect against it, any plugin or anything you can advise?
    I get so much lately it’s driving me crazy so any support is very much appreciated.

  9. gamefly free trial

    Greetings, I think your web site could be having browser compatibility
    issues. Whenever I look at your website in Safari, it looks fine however,
    when opening in Internet Explorer, it’s got some overlapping issues.
    I merely wanted to provide you with a quick heads up!
    Apart from that, fantastic site!

  10. gamefly free trial

    I am not sure where you are getting your info, but great topic.
    I needs to spend some time learning more or understanding more.

    Thanks for wonderful info I was looking for
    this info for my mission.

  11. tinyurl.com

    I read this piece of writing fully regarding the comparison of hottest and preceding technologies, it’s
    amazing article.

  12. how to get help in windows 10

    Hi there friends, how is the whole thing, and what you
    desire to say on the topic of this paragraph, in my view its actually amazing designed for me.

  13. how to get help in windows 10

    Hey! I know this is kind of off topic but I was wondering which blog platform are you using
    for this website? I’m getting tired of WordPress because I’ve had problems with hackers
    and I’m looking at alternatives for another platform.
    I would be great if you could point me in the direction of a good platform.

  14. natalielise

    Thank you a lot for sharing this with all folks you really
    recognise what you are speaking approximately! Bookmarked.
    Kindly also discuss with my site =). We could have a link change contract among us plenty of fish natalielise

  15. plenty of fish dating site

    Fantastic post however , I was wanting to know if you could write a litte
    more on this subject? I’d be very thankful if you could elaborate a little bit more.


  16. dating site

    After I originally left a comment I seem to have clicked on the -Notify
    me when new comments are added- checkbox and now whenever
    a comment is added I receive four emails with the same comment.
    Perhaps there is a means you are able to remove me from that service?

  17. plenty of fish dating site

    Hi to all, how is all, I think every one is getting more from
    this web page, and your views are good designed for new people.

  18. quest bars cheap

    It’s actually a nice and useful piece of information. I’m
    glad that you shared this helpful info with us.

    Please keep us up to date like this. Thanks for sharing.

  19. Otelia Balado

    Hey there are using WordPress for your blog platform? I’m new to the blog world but I’m trying to get started and create my own. Do you need any html coding expertise to make your own blog? Any help would be greatly appreciated!|

  20. Ling Mccoun

    Undeniably consider that that you said. Your favorite justification seemed to be on the web the simplest thing to have in mind of. I say to you, I certainly get annoyed whilst other people consider issues that they just do not know about. You controlled to hit the nail upon the top and defined out the entire thing without having side effect , people could take a signal. Will probably be again to get more. Thank you|

  21. Jerrod Crease

    That is very interesting, You are a very professional blogger. I’ve joined your rss feed and look forward to looking for extra of your fantastic post. Also, I’ve shared your site in my social networks|

  22. Vincenzo Trezise

    Your style is unique in comparison to other people I have read stuff from. Thanks for posting when you have the opportunity, Guess I’ll just bookmark this site.|

  23. quest bars cheap

    Hi to all, the contents present at this web page are genuinely amazing
    for people experience, well, keep up the good work

Leave a Comment