Citizens can pay individual income tax, business income tax, sales and use tax, withholding tax, severance tax and excise fuel tax using cryptocurrency
Colorado residents can now pay state taxes via cryptocurrency, a move Gov. Jared Polis said carries lower fees than credit card payments.Ā
Colorado is partnering with PayPalās cryptocurrency arm on the endeavor. The service fee for such transactions is $1.00, plus 1.83% of the total, according to the stateāsĀ Department of Revenue.Ā
Taxpayers opting to use direct debit are not subject to fees. Credit card payments impose a $0.75 fee, plus 2.25% of the net payment.Ā
Residents can āĀ for the first time ā pay individual income tax, business income tax, sales and use tax, withholding tax, severance tax and excise fuel tax using cryptocurrency.Ā
Transactions can only be completed through PayPal personal accounts, as opposed to PayPal business accounts, and payments must be made in full using only one cryptocurrency, the Department of Revenue said.Ā
āWe are touting Colorado as the center of the crypto economy,ā Polis said in anĀ interviewĀ ahead of the ETHDenver conference conference in February. āWe have not only very favorable laws and rules, but we also have a great ecosystem of innovation here.ā
The Department of Revenueās website did not list specific acceptable cryptocurrencies, but PayPal supports bitcoin, bitcoin cash, ether and litecoin.Ā
āOur budget is still in dollars, our expenditures are still in dollars, and, of course, we donāt want to take the speculative risk of holding crypto, so we will be having a transactional layer there,ā Polis said. āIt will be entering our systems as dollars. For consumer convenience, we want to accept payments in a wide variety of cryptocurrencies.āĀ
Taxpayers opting to use cryptos should expect additional fees down the line. They will be responsible for keeping track of these transactions and determining tax obligations, legal experts said.
āColoradoās plan to accept crypto currency for state tax payments and other government fees is proof of cryptoās wide acceptance as both an investment and payment method,ā Kell Canty, CEO of Ledgible, said, at the time of the initial plan announcement. āOf course, using crypto to pay taxes does not change the tax treatment of the transaction for federal income or state income tax purposes.ā
