Feb 02, 2015
From KPMG TaxWatch
Legislation (House Bill 552) was recently introduced in New Hampshire that, if passed, would require the state to adopt a plan to accept bitcoin as payment for taxes and fees. Bitcoin is a software-based online payment system introduced in 2009. Payments work peer-to-peer without a central repository or single administrator, which has led the U.S. Treasury Department to call bitcoin a decentralized virtual currency. Bitcoin is currently the most popular online currency, and is accepted by certain retailers. For federal tax purposes, bitcoin is treated as property. Only a few states have addressed the state tax issues associated with bitcoin. Those that have opined have generally concluded that the sale of bitcoins is not a taxable transaction, but that purchases of taxable goods and services using bitcoins are taxable at the value of the consideration received by the seller.
House Bill 552 would require certain New Hampshire state officials to develop an implementation plan for the state to accept bitcoin as payment for taxes and fees beginning July 1, 2017. The plan would address any accounting, valuation, and management issues related to accepting bitcoin and would identify an appropriate third party payment processor to process bitcoin transactions. If the bill is enacted, the plan must be submitted to the Governor and members of the state legislature on or before January 1, 2017. It is not clear whether the plan would need to be approved by the legislature. Please stay tuned to TWIST for future updates on this and other proposed state tax legislation.
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The following information is not intended to be "written advice concerning one or more federal tax matters" subject to the requirements of section 10.37(a)(2) of Treasury Department Circular 230.
The information contained herein is of a general nature and based on authorities that are subject to change. Applicability of the information to specific situations should be determined through consultation with your tax adviser.