Colorado Now Accepts Cryptocurrency for Tax Payments
Colorado now accepts cryptocurrency as tax payments, the state Department of Revenue has confirmed.
The payment program, which started September 1, was first announced by Gov. Jared Polis (D) earlier this year.
“In Colorado, we’ve been laying the groundwork to be a center of crypto and blockchain innovation for a number of years. We see it as a critical part of Colorado’s overall innovation ecosystem,” he said in an Instagram post in February.
The DOR has updated its website with information on how taxpayers can submit payments using cryptocurrency. According to the department's tax payment portal, Revenue Online, taxpayers will submit tax payments through PayPal’s Cryptocurrencies Hub. From there, the cryptocurrency will be converted to U.S. dollars, a process that the department says takes three to five business days.
DOR spokesman Daniel Carr told Tax Notes September 21 that the DOR can accept bitcoin, bitcoin cash, ethereum, and litecoin for tax payments through its vendor relationship with PayPal’s Cryptocurrencies Hub. He added that Coloradans can use cryptocurrency for all state tax payments, including for individual income, business income, sales and use, withholding, severance, marijuana, and excise fuel taxes.
For taxpayers who might be concerned about payment security issues, Carr said the hub serves as a payment option like e-checks or the Automated Clearing House. “Our goal is to simply give taxpayers a diverse array of options for making their tax payments,” he added.
The state also accepts tax payments via electronic funds transfers, credit and debit cards, checks, money orders, and cash payments, according to the DOR website.
Polis had earlier this year also told CNBC News that other Colorado state agencies would eventually follow suit with accepting cryptocurrency payments for items like driver’s or hunting licenses.
“Colorado is a forward-looking state and we will assess the future adoption to other services,” Conor Cahill, spokesman for Polis, told Tax Notes September 22. "We will monitor the adoption of tax crypto payments by Coloradans to guide the future development of cryptocurrency as a payment for various other government services.”
Colorado will also look into allowing the use of digital tokens to finance capital construction projects. Under S.B. 25, sponsored by Senate Appropriations Committee Chair Chris Hansen (D) and signed into law June 7, the state treasurer is directed to examine the feasibility of using security token offerings for capital financing.
According to an August 23 fiscal note on the legislation, security tokens are “digital, liquid contracts made verifiable and secure using blockchain technology, and establish an owner’s right to a fraction of a financial asset, such as a stock, bond, or certificate of participation.” The treasurer must submit the study’s findings to the legislature by March 1, 2023. The treasurer is also authorized to recommend that the General Assembly pass legislation to authorize the use of security token offerings for capital financing.