Assigned to FIN AS
PASSED BY COMMITTEE
Assigned to FIN AS
PASSED BY COMMITTEE
ARIZONA STATE SENATE
Fifty-Third Legislature, Second Regular Session
AMENDED
Purpose
Permits payment of state income tax using bitcoin, litecoin and any other recognized cryptocurrency.
Background
According to the Internal Revenue Service, virtual currency is a digital representation of value that functions as a medium of exchange, a unit of account or a store of value, which may be used as payment for goods or services, or held for investment purposes (Notice 2014-21). According to the National Conference of State Legislatures (NCSL), cryptocurrencies, such as bitcoin, are digital or virtual currencies that use encryption methods to make them secure (NCSL).
Current law requires state income tax, including any interest and penalties, to be paid to the Arizona Department of Revenue (DOR). Payment may be in the form of a check payable to ADOR during such time and under such regulations as the Director of DOR may prescribe (A.R.S. § 43-505). According to DOR, acceptable forms of payment, in addition to check, currently include credit card, cash or electronic transfer.
According to DOR, this legislation adds a new method of payment for taxpayers but makes no change to tax liability and therefore would have no state revenue impact. However, DOR does anticipate significant fiscal impact with respect to the cost of implementing the bill.
Provisions
2. Requires DOR to convert cryptocurrency payments to dollars and credit a taxpayer's account with the converted dollar amount, less any fees or costs incurred by DOR for conversion.
3. Becomes effective on January 1, 2020.
Amendments Adopted by Committee
1. Specifies acceptable cryptocurrencies as bitcoin, litecoin and any others that DOR recognizes.
2. Removes the requirement that DOR convert cryptocurrency payment within 24 hours.
3. Allows DOR to credit the converted dollar amount, less any fees or costs incurred for conversion.
4. Adds a delayed effective date of January 1, 2020.
Senate Action
FIN 1/24/18 DPA 4-3-0
Prepared by Senate Research
January 26, 2018
FB/AF/lb