Ohio appears to be the first state that will accept bitcoin as
payment for tax bills.1 Other states, such as Arizona,
Georgia and Illinois, have considered allowing bitcoin tax
payments, but the bills have not passed the relevant legislative
bodies.2 Starting this week, Ohio reportedly will allow
businesses to pay corporate taxes in bitcoin by sending the bitcoin
to a payment processor called BitPay, which will then convert the
bitcoin to dollars for the state treasurer's office. In its
move to rebrand the state as a tech hub, however, Ohio may also be
introducing unexpected tax consequences to its taxpayers.
Economically, the use of cryptocurrency to pay state tax
liabilities is the same as selling the cryptocurrency for cash and
using the cash to pay the liability. There may be taxpayer savings
associated with this process, such as lower transaction fees for
payments made in cryptocurrency, or favorable exchange rates as the
cryptocurrency is converted into dollars.
