Phoenix, AZ— Arizona may become the first state in the U.S. to allow residents to pay their tax bill using Bitcoin or other cryptocurrency after the Arizona state Senate passed SB 1091 on February 8, which would allow Arizona taxpayers to use “a payment gateway, such as Bitcoin, Litecoin or any other cryptocurrency recognized by the department, using electronic peer-to-peer systems,” according to the legislation. The bill now moves on to the Arizona House of Representatives for consideration.
According to a report by AZ Central:
“The bill would allow income taxes to be paid in Bitcoin or other cryptocurrency approved by the Arizona Department of Revenue starting in 2020.
The revenue department would be required to convert such payments to U.S. currency at the prevailing rate, crediting the taxpayer’s account with the converted dollar amount. Therefore, any swing in price that resulted in the state not getting the full payment would be the responsibility of the taxpayer.”
“It’s one of a litany of bills that we’re running that is sending a signal to everyone in the United States, and possibly throughout the world, that Arizona is going to be the place to be for blockchain and digital currency technology in the future,“ Arizona State Republican Rep. Jeff Weninger, who co-sponsored the bill, told Fox News.
Prior to the bill’s Senate approval last Thursday, Arizona State Senate Minority Leader Steve Farley (D-Tucson) aired his concerns to his colleagues.
“The state Department of Revenue is having a hard enough time doing its job with the cuts that have been made to auditors collectors and other people like that,” Farley said. “To give them another task is a difficult thing to do.”
Farley also noted that he believed the volatility of Bitcoin is a point of contention.
“What this does in effect is transfer the volatility risk off the person paying their taxes and onto the Department of Revenue and thus all other taxpayers,” Farley said. “We take American dollars at the Department of Revenue to pay taxes. I think American dollars ought to be good enough.”
Sen. Warren Petersen, R-Gilbert, a co-sponsor of Senate Bill 1091, rebutted Farley’s stated fears, noting that Revenue Department would only credit taxpayers the value of the cryptocurrency after being converted to dollars, thus mitigating any risk to the Department of Revenue and Arizona taxpayers.
“Even if for some reason the state doesn’t receive what was sent, the state will only credit you with what is received,” Petersen said.
During a January 24 Senate Finance Committee hearing, Petersen said the bill would give taxpayers more options, according to AZ Central. “This is all about ease and convenience,” Petersen said. “Here in government, we are here to serve the people.”
“Some of the people saying this is dumb are the same kind of people when the Internet first got going would say it’s dumb,” Petersen said.
In addition to Arizona’s ambitious legislation, Colorado and Wyoming lawmakers have also introduced legislation that supports blockchain technology and the use of cryptocurrency; Senate Bill 86 in Colorado proposes the use of blockchain for governmental data security and two bills in Wyoming aim to relax regulatory control over cryptocurrency trading.
While some countries, like China, are cracking down on the crypto industry, U.S. regulators appear more open to accepting Bitcoin and other cryptocurrencies as financial instruments based upon recent developments. Finance Magnates reports that just last week, Christopher Giancarlo, Chairman of the Commodity Futures Trading Commission (CFTC), expressed support for the crypto market, while the introduction of Bitcoin futures by the CBOE and CME exchanges provides further indication that the U.S. mainstream is beginning to accept crypto as a financial instrument.