A Trio of States Are Now Looking at Cryptocurrency for Tax Payments

Bitcoin as a payment method may have its critics, but apparently some state governments looking for new ways to collect taxes aren’t too concerned. Illinois is now the third state to introduce legislation that would clear the way for citizens to pay their obligations with cryptocurrency, joining Arizona and Georgia.

The Illinois proposal, House Bill 5335, was introduced Feb. 15 by state Rep. Michael J. Zalewski. It was spotted Tuesday by Coindesk, a news service that covers cryptocurrency, just as the proposal was referred to the legislature’s Revenue & Finance Committee.

The bill would require the Department of Revenue to allow payment by cryptocurrency of any tax the state levies and that the department collects. It would also mandate that any such payment be converted to dollars within 24 hours and the taxpayer credited with the dollar amount.

The Arizona and Georgia proposals, which are similar to the Illinois bill, have been introduced just since the start of the year, with Arizona acting first. In that state, the bill is now in the hands of the House of Representatives after passing the Senate early last month by a vote of 16-13, according to Coindesk.

The state actions come as the leading digital currency, Bitcoin, is showing signs of regaining its usefulness as a medium of exchange. The coin’s average confirmation time, which soared to nearly 40 hours in late January, stood at 37 minutes as of Monday, according to Blockchaiin.info. That’s the swiftest time the currency has recorded in nearly six months.

The prolonged time to get a transaction confirmed by the so-called miners that create new coins resulted from congestion on the Bitcoin network and has discouraged a number of merchants, leading some to stop acceptance. One such move was announced Jan. 23 by the e-commerce processor Stripe Inc., which will no longer accept Bitcoin after April 23.

Another byproduct of the crowded network, sky-high transaction fees, have also moderated dramatically in recent weeks. The median fee stood at 52 cents on Monday after peaking at $34 two days before Christmas, according to Bitinfocharts.com.