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Josh Mandel, Treasurer of the State of Ohio, made it possible for businesses to pay taxes using Bitcoin.
In the coming weeks, state-owned business owners will be able to register and settle their online tax obligations, payments to be processed by the BitPay cryptocurrency payment service provider.
Businesses will be able to pay 23 different taxes with the help of BTC via an online portal set up by the Treasury office. In the current state of affairs, individuals will not be able to use this service to pay private taxes.
The Ohio treasurer has made it clear that he will not hold any bitcoin. The cryptocurrency will be converted immediately into US dollars after payments have been made to BitPay. Businesses of all sizes will be able to use the payment service.
Reasons for moving
The Ohio Treasurer said the initiative was intended to provide more options for businesses and residents of the state to interact with the state government.
Mandel has been a bit of a pioneer in integrating emerging technologies into state systems and offerings. In 2014, he launched OhioCheckbook.com, which has made available online and publicly available all information related to the Government of Ohio's state expenditures.
According to a study by the US Public Interest Research Group.
This latest initiative aims to make the state a leader in the development and adoption of block-chain technologies, as Mandel told Cointelegraph in an interview this week. First, the state wants to offer more options to taxpayers when they pay taxes:
"Second, let the rest of the country and the world know that the state of Ohio is a leader in blockchain technology. I think that if we want to develop our technological economy here in Ohio, we must first be a technology leader. "
Mandel added that he had been a crypto enthusiast for a few years and that it was simply part of a process to spark wider adoption of cryptocurrency and blockchain technology across the globe. country:
"Here in the United States, the states are the laboratories of democracy, and I think that perfectly illustrates this concept. This idea begins at the level of the state of Ohio, but the ultimate goal is to make the federal government follow suit. "
Longevity of the project
Mandel's mandate as Ohio's treasurer is expected to end in January 2019, but he remains confident that the move will continue to operate once he leaves office.
It was reported that Mandel had discussed it with his elected successor, Republican Rep. Robert Sprague, and Mandel confirmed to Cointelegraph that they had discussed the issue:
"I told him about it, he and I are friends and allies and I am confident that it will continue."
Having been launched this week, the first phase only allows Ohio companies to pay their taxes using cryptocurrency. But as Mandel explains, it is only the first step of some ambitious projects to accept different cryptocurrencies and offer the service to individual taxpayers.
"In the next phase of Ohiocrypto.com, we hope to expand the initiative to allow individuals to pay their taxes in cryptocurrency and extend beyond Bitcoin to include d & # 39; 39, other cryptocurrencies. "
Given the project's childhood, Mandel was reluctant to speculate on a given schedule for the role of future improvement.
"As with any new initiative that has never been launched in America, it is important that we take our time and be careful and thoughtful. We will take the process slowly, and develop it and develop it on what we believe to be a cautious timeline. "
Mandel also explained that the decision to convert Bitcoin directly into fiat money had been made as a result of extensive research by his team.
"When dealing with taxpayers' money, the most important variables are the security and safety of tax money. Every decision we make at the Ohio Treasury office is motivated by that. "
Stephen Paire, CEO of BitPay, told Cointelegraph that this initiative was an important initiative for blockchain and cryptocurrency-based businesses, which could effectively use the payment option:
"One of the things we do is talk to all the companies in the blockchain and cryptocurrency business and find out who their suppliers are. We then talk to them and have them sign up with BitPay, allowing companies in our industry to be able to pay their bills with the technology they build the infrastructure for. Obviously, all these companies have to pay taxes, so it makes sense that all these companies are able to pay their taxes with cryptocurrency. "
Create a new precedent
Ohio is the first US state to launch this new payment method, but it is not the first to have tried.
Other US states have tried to enact laws allowing the payment of taxes by cryptocurrency. However, these bills have been stopped by state legislators.
In May 2018, the Arizona House of Representatives pbaded a bill allowing citizens to pay their taxes using cryptocurrency. Despite this, the bill has not yet come into force because of the fine print amendments.
The review requested a study on the possibility of these alternative forms of payment, but it was not specified when this will be done.
Similarly, Georgia wanted to adopt in February a bill allowing the use of cryptocurrencies as an option for the payment of taxes and state licenses. However, the bill "died in committee," according to a report on progress made by Legiscan. Illinois is also studying a similar bill.
Despite these failures, other US states have pbaded various bills that have favored the adoption of cryptocurrency and blockchain technology, which bodes well for the future of adoption.
Wyoming was able to pbad a number of bills in which cryptocurrencies were ranked as a new clbad of badets in the state in March 2018.
Things could get complicated
This decision has interesting implications for companies looking to take advantage of the new payment method.
A number of countries around the world have imposed taxes on cryptocurrency gains, which should be taken into account for entities that will pay their taxes using Bitcoin.
As international tax attorney Selva Ozelli pointed out at Cointelegraph, companies will have to face additional processes to hold and use cryptocurrencies:
"Companies will have to keep track of the base, the holding period, the price of cryptocurrencies; they will have to learn how to cover the price fluctuations between the USD and the cryptocurrencies; they will have to comply with FinCEN money laundering and additional laws. They will have increased record keeping requirements and more sophisticated treasury functions – just like multinational corporations. On the other hand, these enhanced compliance requirements will encourage blockchain companies to design systems that simplify these features for future businesses and fuel the growth of blockchain-related jobs. "
Mr Niklas Schmidt, a partner at the law firm Wolf Theiss, also made a similar observation, especially for companies that have been keeping their bitcoin for some time:
"The payment of taxes in the encrypted currency creates an interesting problem: if a taxpayer bought a bitcoin some time ago and that he has an unrealized gain, in most jurisdictions, the release of the taxpayer". a liability with such a valued badet will result in taxation of the gain. In other words, paying your Bitcoin taxes can trigger a tax again. "
Another factor to take into account is that state-owned companies will still be required to pay a federal tax, which can only be done with fiat money, according to Schmidt.
A sign of things to come
This tax payment option is not entirely new, but considering the impact it could have in Ohio and America, it could potentially extend to more countries.
Although these initiatives may have failed in other US states, Ozelli believes that the success of such initiatives in other countries proves that there is an interest in this option being available.
"In the United States, other states have also considered accepting cryptocurrencies for tax purposes, but initiatives in Arizona, Georgia, and Illinois have never gone beyond the state legislatures. . The Swiss municipality of Chibado has allowed residents to pay their taxes to Bitcoin from January 2018, while Seminole County, Florida, has become the first US county to announce its acceptance of Bitcoin payment. his taxes in May 2018. "
Schmidt also told Cointelegraph that Zug, a Swiss municipality, also accepts the payment of Bitcoin taxes. Since many places in the world are actively offering this payment option, it seems auspicious for it to become more commonplace.
Anthony Pompliano, investment advisor in cryptocurrency, made an astute observation in his daily newsletter, citing such milestones as an example of a case of important use for the future of cryptocurrency:
"Historically, Bitcoin's critics have said that the digital badet could not be a currency because you could not pay your taxes with it. This is obviously no longer true now. This is another data point that supports the legitimization of the world's most popular decentralized digital currency. "
Government agencies and financial institutions are slowly seeing the value of incorporating cryptocurrencies into some processes. Every step in this direction is positive, especially when we focus on the current market situation.
Mandel hopes that his work with the Treasury will help bring other states to follow in their footsteps and impose themselves at the national level:
"I hope that what we do in Ohio will encourage the states of the country to allow their taxpayers to pay in cryptocurrency and ultimately to the federal government to pay federal taxes with crypto . "
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