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ARIZONA STATE SENATE
Fifty-Sixth Legislature, Second Regular Session
virtual currency; property tax exemption
Purpose
Conditional on the voter approval of S.C.R. ____, exempts virtual currency from property tax.
Background
All property in Arizona is subject to taxation with certain exemptions outlined in the Arizona Constitution and prescribed by statute (A.R.S. § 42-11002). According to the U.S. 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. Virtual currency that has an equivalent value in real currency or acts as a substitute for real currency is referred to as convertible virtual currency. For federal tax purposes, virtual currency is treated as property and the general tax principles that apply to property transactions apply to virtual currency transactions (U.S. IRS Notice 2014-21).
There is no anticipated fiscal impact to the state General Fund associated with this legislation.
Provisions
1. Exempts virtual currency from property taxation.
2. Defines virtual currency as a digital representation of value that functions as a:
a) medium of exchange;
b) unit of account; and
c) store of value other than a representation of the U.S. dollar or a foreign currency.
3. Conditions the enactment of this legislation on the enactment of S.C.R. ____, Fifty-Sixth Legislature, Second Regular Session, by a vote of the people at the next general election.
Prepared by Senate Research
January 24, 2024
MG/cs