Key Takeaways:
- Residents of Colorado can now use cryptocurrency to pay state taxes.
- Taxpayers of the state may do so via PayPal for an additional fee.
As the first U.S. state to accept bitcoin for tax payments, Colorado now allows its citizens to pay their taxes using digital currency.
According to a report by Axios Denver, Gov. Jared Polis announced the adoption of the new payment mechanism on Monday during Denver Startup Week.
Individual income tax, company income tax, sales and use tax, withholding tax, severance tax, and excise fuel tax are all tax types that citizens can pay with bitcoin, according to the data available.
In addition to the more well-known debit and credit cards, ACH debit and credit, and cash, the state government’s Department of Revenue also accepts “cryptocurrency” as payment.
Users who wish to use their bitcoin holdings to pay Colorado state taxes must, nevertheless, use a PayPal account. Colorado’s Department of Revenue explains that “only PayPal Personal accounts can pay using cryptocurrencies,” adding that the user must have the full amount of their bill in a particular cryptocurrency in their PayPal Cryptocurrencies Hub.
The state’s payment site states that for an extra cost, payments are made through PayPal’s cryptocurrency hub.
Polis, a longtime supporter of cryptocurrencies, had earlier this year declared his desire to push for crypto tax payments. In 2016, Polis was one of the Congressional Blockchain Caucus’ co-founders.
He took office as Colorado’s governor in January 2019. He was the first US politician to take Bitcoin contributions for his campaign.
Cryptocurrency taxpayers will pay 1.83% of their payment amount in fees in addition to an additional $1. However, it is challenging to justify paying taxes in bitcoin, particularly given Colorado’s predetermined partnership with PayPal.
While the user would probably miss out on future financial gains from the bitcoin price by doing so, Colorado wouldn’t receive that purchasing power since the state doesn’t intend to store cryptocurrencies or BTC on its balance sheet.
In a February interview with CNBC, Polis discussed his aspirations for the US State to progress further in unproven payment formats as well as his vision for a prospective state token.
Polis stated, “We hope to take cryptocurrency by this summer, relatively soon, for all of our state tax-related activities. Within a few months, we intend to implement it across the entire state government for things like, possibly as basic as a driver’s license or hunting license.”
