Truly the world is embracing the digital Blockchain currency at a fast pace. But Ohio has left everyone behind after announcing that it will accept the taxpayers to pay their tax bill payments in the form of Cryptocurrency. Before this announcement tax consequences existed with cryptocurrency, but Ohio’s new move has stirred up the scenario.
Finer details of the new tax payment system with cryptocurrency:
The new tax payment system with cryptocurrency is open for access to businesses operating within Ohio only. Although allowing individuals to pay their tax bill payments with cryptocurrency is also on the plan. As for now, Josh Mandel (Ohio Treasurer) has not put a clear time frame on the commencement of this tax paying system for individual payers. Currently, the acceptable cryptocurrency by the Treasurer’s office is Bitcoin. In near future, other cryptocurrencies will be added to the list.
How does this new tax payment system works?
For businesses operating in the state of Ohio with a tax bill; they will need to register themselves online at OhioCrypto.com in order to pay their taxes. The platform allows twenty-three types of business-related taxes. You can choose your type. Also, there is no transaction limit.
Ohio’s Treasurer’s Office does not hold, mines or invests in cryptocurrency neither for the payments nor for the processing. A third party called- ‘BitPay’ processes the cryptocurrency payments. The payments are immediately converted into dollars before they are paid into the state account.
In order to make the tax payments successfully, Payment Protocol compatible wallets are required. The list of compatible wallets includes BitPay Wallet, Copay Wallet, BTC.com Wallet, Mycelium Wallet, Edge Wallet (Formerly Airbitz), Electrum Wallet, Bitcoin Core Wallet, Bitcoin.com Wallet, BRD Wallet (breadwallet), and Bitcoin Cash (BCH) Wallets. In absence of any compatible wallets, it is advisable to create a compatible wallet and send a coin to it.
Tax paying Fees:
Paying taxes with cryptocurrency involves fees. Any payments made with credit cards or the debit cards are will be charged a certain fee as decided by the payment providers. This will not include assessed fee through the Treasurer’s office.
Those who will use cryptocurrency to pay their taxes will be charged a transaction fee, a network fee, and the miner fee. One can find the miner fee on the taxpayer’s wallet. It can’t be found on OhioCrypto.com.
The three-month introductory period fee:
During the first three months of the introductory period of this new tax paying system through cryptocurrency, there will be 0% transaction fee. After the first three introductory months, the transaction fee will be charged at 1% rate. Please note that the fees are user fees and are not supplemented by state funds.
‘The State of Ohio will not pay BitPay or any other company fees for processing or other services relating to the acceptance of crypto.’ – As per Treasurer’s Office of the State of Ohio.
The state of Ohio has certainly started a new trend in 2018 which looks promising on several fronts. Although in 2016, the bill for accepting Bitcoin as a payment method for the taxes was not voted in support. It gained only 74 votes against 264 votes by the New Hampshire Legislature. In Georgia to a similar scene was observed when another bill to accept cryptocurrency as a mode of payments to pay the taxes was not supported either, in the early quarter of 2018. This idea of accepting cryptocurrency as a mode of paying taxes was greeted with support in Arizona’s state legislature. The state passed the ‘Crypto payment measure’ on 16th May 2018.
On the other hand, the Internal Revenue Service (IRS) (IRS regulates the interpretations of tax codes and lays guidance about the kinds of acceptable payments towards the tax payment), still doesn’t accept the cryptocurrency as a payment method for taxes. Currently, IRS sticks with the traditional and time-tested methods of payments such as by check, money order, credit card, and debit card.