Cryptocurrency investors often worry about how to report taxes on their profits, but most would never dream of being able to actually pay these obligations using digital money. However, two Georgia senators, Michael Williams and Joshua Mckoon, hope to make this unlikely situation a reality. The pair have proposed a new bill aimed at changing the Georgia Department of Revenue’s rules and enable it to accept payments in, quote “any cryptocurrency, including but not limited to Bitcoin, that uses an electronic peer-to-peer system”.
This proposed legislation is similar to a bill currently making its way through the legislature in Arizona. The Arizona bill suggests creating a “payment gateway” to allow people to pay tax, interest, and penalties owed to the state government using cryptocurrency. The Arizona bill succeeded in the senate by a 16-13 margin on Feb 8th, but is yet to be approved by the other chambers of government.
How Would the Scheme Work?
The U.S government doesn’t invest in cryptocurrency, and digital assets are not considered legal tender in the United States. So instead of turning the Georgia state government into a digital asset speculator, the proposed legislation is designed to enable the state’s revenue commissioner to convert tax payments made in cryptocurrency into dollars at the market rate within 24 hours of receiving the payment. The dollars would then be credited to the payor’s account.
A system like this would make it easier for people to pay capital gains tax on cryptocurrency earnings, but it could also create more work for the government and debate over which exchange should be used to determine the market rate. The one-page document omits these details.
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