Can You Pay Your Tax Bill With Bitcoins?
Not This Year. That was the message the New Hampshire House of Representatives sent supporters of a legislative push that would have made the state the first in the country to allow residents to pay their taxes using bitcoin.
The bill, HR552, introduced last year by New Hampshire State Representative Eric Schleien (R), was voted down last month by a vote of 264 to 74. The bill would have required the state’s treasurer to “develop an implementation plan for the state to accept bitcoin as payment for taxes and fees.”
Bitcoin first appeared on the global currency scene in 2009. Bitcoin is a digital currency which means that you don’t rely on an exchange of paper for transactions and there is no centralized bank that records your transaction. Instead, bitcoins are stored in a digital “wallet” which can be found on your computer. You spend bitcoins just as you would dollars on everything from shopping for furniture on Overstock.com to booking a vacation on Expedia.
While the popularity of Bitcoin is spreading, the government and taxing authorities have been slow to embrace the virtual currency. The IRS does not accept bitcoins as direct payment for your tax obligations nor do any states (though you can pay taxes and fees in some instances using payment processors). Schleien was hopeful that New Hampshire would be the first to accept the currency as payment for taxes and fees, calling the approach “innovative”.
While at work on the bill, Schleien worked to educate the public and his colleagues about Bitcoin, specifically addressing the issues of risks and costs. By using a third party payment processor like BitPay, he noted that there would be “no cost to the state” and “no risk to the state”. The conversion to dollars would be automatic, eliminating concerns about volatility.
Still, the legislature wasn’t ready to bite – yet. Schleien pointed out that 74 representatives voted in favor of the bill, a number he calls “pretty amazing”.
So what’s next? Schleien vows to try again. Now that he knows which of his colleagues aren’t on board with the bill, he can work to change their mind by educating his colleagues and voters about the bill. It could take awhile, he says, perhaps even two to three years. But, he says, “I’ll keep trying until it passes”.
So, what do you think about Bitcoin?
Will we see the day that the IRS, and State governments accept Digital Currency?
Bruce – Your Host at The Tax Nook
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