Colorado will now accept cryptocurrencies for tax payments, allowing city residents who want to use this service. This development was recently announced by Governor Jared Polis who has previously put forth a notion for cryptocurrency tax payments— but was delayed due to unknown reasons.
The state Department of Revenue website now includes the option to accept digital tokens as payment for taxes.
Colorado’s past has generally been favourable for digital currencies, and this has even helped it rank among the top five crypto states on The Ascent’s list. The state enacted the Colorado Digital Token Act in 2019. Certain digital tokens are excluded from the securities restrictions under this act.
The Cryptocurrency Hub of PayPal will accept tax payments. Only one sort of crypto will be used to collect payments from a person’s personal accounts. Businesses have not yet been given the go-ahead to pay taxes with digital tokens; only personal accounts are permitted to do so.
Residents can now pay their taxes using cryptocurrency, but they must also pay a $1 fee for charges and 1.83% of the tax.
The transfers may take up to three to five days to complete, but the payments will become effective the day they are started. Then, these payments are instantly converted to fiat money.
Many other states also desired to accept digital tokens for tax payments. In 2018, Ohio was the first to implement it, however, it was later suspended due to legal difficulties. The measures to implement digital token tax payments in New Hampshire were also proposed, but they were ultimately never approved by the state legislature. This was also true for Illinois, Georgia, and Arizona because those states also considered cryptocurrency tax payments.
Miami and New York both had legislation that was cryptocurrency-friendly. The mayors of Miami and New York decided to accept Bitcoin as their first paychecks. Businesses that deal in digital tokens were drawn to these areas by this strategy.
Colorado made a decision in favour of digital assets at the time, and recent crypto tax payments have just reaffirmed that.