Ohio and Florida may have tried digital asset tax payments and failed, but Colorado believes it can make it work this time. The state now accepts payment for state taxes in digital assets for a 1.83% fee, but only through PayPal.
Governor Jared Polis had pledged to allow digital asset tax payments earlier this year, and early this week, he made good on his promise. Speaking at the opening ceremony of the Denver Startup Week, the governor claimed that this is an example of the state “fostering bold ideas” and being “tech-forward.”
“As of right now, the state of Colorado is officially accepting cryptocurrency as a payment option for all taxes. We’ve been talking about this for a while. We said we would deliver by the end of summer and we have,” the governor said.
Coloradans can now pay individual income tax, business income tax, sales and use tax, withholding tax, excise fuel tax, and severance tax in digital assets. In an interview in February, Gov. Polis pledged that in due time, the state would start accepting digital assets for drivers’ licenses as well as fishing and hunting licenses.
For now, taxpayers must have a PayPal account to participate in the program. They will have to pay a $1 fee on top of 1.83% of the total amount. Currently, PayPal only supports BTC, Litecoin, ETH, and BCH.
While Colorado residents may be paying the taxes in digital assets, the state government doesn’t intend to hold any of it.
“We are using PayPal Cryptocurrencies Hub to accept all payments via cryptocurrency and they adjust for whatever the accepted cryptocurrencies values are in real-time. There is no risk to the state,” Daniel Carr, the state’s Department of Revenue spokesperson explained.
“As a state, we’re on the forefront of digital innovation, whether it’s applying blockchain and shared-ledger technology as a new model for funding, or whether it’s simply being consumer-friendly and making sure that we allow for the kind of innovation that will disrupt legacy business practices and government practices to make them more efficient,” the governor said.
Polis is an avid digital asset and blockchain enthusiast. He already accepts digital asset contributions for his reelection campaigns and to raise more money. He’s also been selling non-fungible tokens (NFTs) for $52.80 each. Axios reports that so far, he’s sold 175 in a campaign that’s been ongoing since June.
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