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ARIZONA STATE SENATE
Fifty-Sixth Legislature, Second Regular Session
state agencies; payments; cryptocurrency
Purpose
Effective January 1, 2025, authorizes a state agency to enter into an agreement with a cryptocurrency service provider to accept cryptocurrency as a method of payment for any amount due to the state agency or the state. Allows tax payments to be made in cryptocurrency if the Arizona Department of Revenue (ADOR) enters into an agreement with a cryptocurrency service provider to accept cryptocurrency as a method of payment.
Background
Cryptocurrency is a type of convertible virtual currency that can be used as payment for goods and services, digitally traded between users and exchanged for or into real currency or digital assets (IRS).
Transaction
privilege tax (TPT) is a gross receipts tax levied for the privilege of
conducting business in Arizona and is imposed under 16 business
classifications. Statute requires businesses to pay TPT to ADOR by the 20th day
of the following month after the tax is incurred. All TPT payments must be made
to ADOR by: 1) bank draft; 2) check; 3) cashier's check; 4) money order; 5)
cash; 6) money order; 7) cash; or 8) electronic funds (A.R.S. §§ 42-5008;
42-5014;
and
42-5018).
Individual and corporate income tax is levied on taxable income. Income tax may be paid in installments or in one payment, as prescribed. Corporate income tax can be paid by electronic funds transfer and individual income tax can be paid by check, cashier’s check, certified check, money order, U.S. currency or by the application of an overpayment from a prior tax return (A.R.S. §§ 43-1011; Version 2; 43-1111; A.A.C. R15-2C-101; and R15-10-302).
There is no anticipated fiscal impact to the state General Fund associated with this legislation.
Provisions
1. Allows a state agency to enter into an agreement with a cryptocurrency service provider to provide a method to accept cryptocurrency as a payment method of fines, civil penalties, other penalties, rent, rates, taxes, fees, charges, revenue, financial obligations and special assessments.
2. Allows a state agency that has entered into an agreement with a cryptocurrency service provider to accept cryptocurrency as a payment method for any amount due to the state agency or the state.
3. Requires an agreement with a cryptocurrency service provider to:
a) govern the terms and conditions on which cryptocurrency may be accepted or declined as a form of payment; and
b) provide the manner and conditions that a cryptocurrency service provider must pay the state in cryptocurrency or U.S. dollars pursuant to the agreement.
4. Allows ADOR to enter into an agreement to accept cryptocurrency for the remittances of TPT and municipal tax.
5. Adds cryptocurrency to the permissible methods of remitting taxes to ADOR, if ADOR enters into an agreement with a cryptocurrency service provider.
6. Deems a person that pays with cryptocurrency liable for the payment and all interest and penalties until the state agency receives the final and unconditional payment of the full amount due from the cryptocurrency service provider for the cryptocurrency transaction.
7. Allows a state agency to pay any transaction service fees specified in a cryptocurrency payment agreement or require a person that pays with cryptocurrency to pay the service fees associated with the cryptocurrency transaction.
8. Defines cryptocurrency as any form of digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of monies, operating independently of a central bank, including Bitcoin, Ethereum, Litecoin and Bitcoin Cash.
9. Defines a cryptocurrency service provider as a person or entity with demonstrated experience converting any form of cryptocurrency, including Bitcoin, Ethereum, Litecoin and Bitcoin Cash.
10. Makes technical changes.
11. Becomes effective on January 1, 2025.
Prepared by Senate Research
January 24, 2024
MG/JC/cs