The state of Arizona moved one step closer to accepting digital currency for state income tax payments last night, after the state Senate voted to pass a bill designed to allow taxpayers to use cryptocurrencies to meet their tax obligations. Arizona Senate Bill 1091 was passed with 16 yeas, 13 nays, and one abstention.
Sixteen Republican Senators voted to approve the bill, while twelve Democrats and one Republican voted against the measure. The bill will now move to the Arizona House of Representatives, which must give similar approval before the measure can be sent to the Governor.
The bill was co-sponsored by Republican Senators Warren Petersen and David Farnsworth, along with two Republican members of the state’s House of Representatives: Travis Grantham and Jeff Weninger. In recent remarks to Fox News, Representative Weninger described the bill’s purpose:
“It’s one of a litany of bills that we’re running that is sending a signal to everyone in the United States, and possibly throughout the world, that Arizona is going to be the place to be for block chain and digital currency technology in the future.”
The text of the bill would permit taxpayers to use certain recognized cryptocurrencies to pay their state income taxes, interest, and any penalties they may have incurred. The language also says that the state’s tax officials would be responsible for determining which digital currencies could be used:
A TAXPAYER MAY PAY THEIR INCOME TAX LIABILITY USING A PAYMENT GATEWAY, SUCH AS BITCOIN, LITECOIN OR ANY OTHER CRYPTOCURRENCY RECOGNIZED BY THE DEPARTMENT, USING ELECTRONIC PEER-TO-PEER SYSTEMS. THE DEPARTMENT SHALL CONVERT CRYPTOCURRENCY PAYMENTS TO UNITED STATES DOLLARS AT THE PREVAILING RATE AFTER RECEIPT AND SHALL CREDIT THE TAXPAYER'S ACCOUNT WITH THE CONVERTED DOLLAR AMOUNT ACTUALLY RECEIVED LESS ANY FEES OR COSTS INCURRED BY THE DEPARTMENT FOR CONVERSION.
If the bill becomes law in its current form, it would be effective for “taxable years beginning from and after December 31, 2019.”