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- The state of Colorado is ready to accept tax payments made in crypto by Summer, 2022.
- At least three other US states are considering passing similar legislation.
According to the governor’s announcement, the state will allow Colorado dwellers to pay tax equivalents in crypto, while a buffer converts it to United States Dollars.
The state’s governor, Jared Polis, gave an interview to CNBC on Tuesday. He said the government is working on the acceptance of taxes in the form of cryptocurrency soon. Furthermore, he added that the inclusion of crypto assets as legal tender should make tax payments convenient. To this end, he outlined the government’s present efforts to find crypto companies that offer off-ramp transactions (conversion of digital currencies to fiat).
Since the government’s expenditures are all in dollars, receivers could exchange crypto payments for fiat (USD), which is more practical. Jared noted that the state is not about to take the risk of holding crypto. Also, he explained why the authorities have opted for a transactional layer instead. The introduction of a buffer means taxes paid in virtual assets will not be subjected to the volatile crypto market.
Furthermore, the Colorado governor also spoke about the government’s interest in extending the support for crypto to several other payments demanded by the law, such as driver and hunting licenses
Polis’ Reputation for Advocating Cryptocurrency
Jaed has a crypto-positive history with digital currencies. Back in 2014, the current Colorado governor was the first US politician ever to receive campaign donations via crypto.
During the Consensus in May 2021, Jared shared his vision of using crypto as a direct payment means for state bills, for the first time.
Crypto Tax Payment Attempts in other American States
Colorado won’t be the first to discuss the adoption of crypto for tax payment. More than a dozen US states are in talks to adjust legislation that will accommodate the evolving crypto industry.
In fact, Ohio already implemented the payment of state taxes by corporations. For this purpose, the government built an online portal for handling payments. However, the attempt did not last long, as only a few companies opted to use this method.
Two other states expected to collect tax in crypto soon are Arizona and Wyoming. An amendment is reportedly in the works in Arizona. The amendment would recognize crypto as a valid asset for paying bills and state-level taxes. While Wyoming is preparing a proposal for enabling residents to pay sales and use tax with crypto.
Colorado’s proposal, on the other hand, pushes for an all-encompassing crypto-friendly tax payment agenda. However, since the time of Jared’s announcement on CNBC, no known official documents have followed yet.
Looking at the bigger picture, Colorado passing this bill will conflict with established federal laws. The IRS considers crypto assets as property. This means tax payment through crypto will incur additional taxes for possession of the asset.