The U.S. state of Illinois is currently weighing legislation which will allow residents to use cryptocurrencies to pay taxes.
House Bill 5335, or the Revenue Cryptocurrency Bill, was introduced by Rep. Michael J. Zalewski and states that “the Department shall accept payment for any tax imposed by the State and administered by the Department by cryptocurrency.”
In practice, the taxpayer would send cryptocurrency as a tax payment which the state department would then convert back into US dollars at ‘the prevailing rate within 24 hours’. The department then credits the taxpayer’s account with whatever value that may be.
The bill was first introduced to legislators on 16th February and was yesterday assigned to the Revenue & Finance committee for consideration. Similar bills are being weighed by Arizona and Georgia which will also legalize Bitcoin as payment for tax. Both the Georgia (Senate Bill 464) and Arizona bill (Senate Bill 1091) similarly outline the exchange from cryptocurrency into USD and subsequent crediting of the taxpayer’s account (though Arizona’s bill does not specify the 24-hour time-frame).
Currently, Arizona is closest to passing or scrapping the legislation, which could potentially affect how the other two are decided. The bill was read to the house a second time on February 20th, with a hearing taking place at 7PM MST tomorrow, March 7th.
The news is likely to excite cryptocurrency investors, and it will come as a relief that some US states seem to be embracing cryptocurrency rather than rejecting it. And its understandable given an unpredictable year which has seen cryptocurrency crackdowns in countries such as China and South Korea, as well as closer to home in Texas. Legislators and companies are also beginning to scrutinize fraudulent ICOs.
This is not the first time that cryptocurrency and tax have been discussed together. There is some uncertainty among investors as to how cryptocurrencies themselves will be taxed, since the US Internal Revenue Service (IRS) classes Bitcoin et al as property, and are therefore subject to capital gain implications.
It will certainly be interesting to see which the way Illinois legislation goes in the coming weeks in addition to how Arizona’s hearing goes tomorrow. Watch this space!
Featured image: ccn.com