Seeing as Bitcoin is going so, so well, Ohio becomes first US state to take biz taxes in BTC Ohio has become the first US state to accept Bitcoin as formal payment for business taxes – everything from sales and vehicle levies to employee tax and electricity costs. Starting this week, Ohio businesses can register online at a new website – OhioCrypto.com – and use the e-currency to cover their dues. The initiative is …
If Bitcoin and its ilk are seen as genuine business investments, instead of the hobby that they obviously are, then you don't only get to tax them: you also have to allow people to reduce their taxes by claiming a business loss, and expenses, depreciation on servers, and a lot of that kind of nonsense that makes the super rich pay no taxes at all.
Soon in a state near you: someone will set up a BitChurch to claim to be tax-exempt.
yeah, having that 3rd party do the currency exchange changes the game a bit. But certainly no government entity should accept currency other than that of the government they're part of, in this case the U.S..
Bitcoin really is 'a foreign currency' as far as all things are considered, from taxation to banking regs. But I don't mind a dedicated 3rd party for exchanges. It simplifies the overall process that way. That's better than an actual gummint entity mucking with exchange rates and instability of the currency, at any rate.
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But certainly no government entity should accept currency other than that of the government they're part of, in this case the U.S..
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Most "government entities" accept foreign currency in at least some transactions. You will find that the UK government accepts visa fees and airport taxes in foreign currencies for example.
Sure, if you have the money, paying income taxes with a credit card is stupid. The transaction fees levied by nearly every tax authority out there are indeed spendy; usually 2+%.
But if you *don't* have the money on-hand, most advisers *do* advise you to pay with a credit card if you have one because the transaction fees + credit card interest, while high, are a *lot* less than what the IRS is going to charge you.
actually for a payment plan, if I remember correctly, IRS interest is 7% [flat rate] per annum. It's really not that bad [they just want the money]. I think the interest rate the IRS charges is related directly to the payment on bonds and other such things, so you're basically paying the IRS to borrow money on your behalf and then paying them an interest on that borrowed money. Or something like that.
Using a credit card is convenient, though, and keeps the IRS off of your back. I've done it, then paid it off swiftly. If you don't have it "in the bank" at the time you do your tax payment, it works. But yeah, transaction fees normally paid by the party receiving the credit card payment are added on top of the payment, thereby [essentially] having YOU pay the transaction fees as well as the balance owed. Really, not that bad.
Sounds like Mr Mandel has taken a long position on BTC, and is trying to shore it up.
I'm trying to resist the temptation to speculate, because I really have no idea and it's quite possible that he's just stupid, not dishonest... but I wonder if he also has shares in BitPay?
Someone is going to go bankrupt pretty quickly over this. Probably BitPay. Let's just hope they don't take the whole state down with them.
Based on a quick read of Mr. Mandel's Wikipedia bio, I would say it's a little from column A and a little from column B.
I don't think anyone could be quite as much of a by-the-book Republican as Josh Mandel:
High School quarterback
Marine corps
Biblical literalist
Stridently anti-gay (also looks to me like he's in the closet, but you know: Judge not lest you be judged)
Several (minor) corruption issues
Anti-Iran
It's like he's straight out of central casting.
Someone is going to go bankrupt pretty quickly over this. Probably BitPay. Let's just hope they don't take the whole state down with them.
I do wonder what amount we're talking here in terms of taxes, and if BitPay will have enough cash on hand to actually keep up their end of the deal.
In theory, these exchanges have a high volume of traffic, but only so many resources on hand (see what happens when they eventually collapse, or they get robbed of their crypto). If Ohio's IRS is only withdrawing cash, who's putting that cash in and buying the BTC?
One would hope they have taken into account the money laundering angles.
* Overpay tax in bitcoins, get USD back as a refund
* Setup a 'Pay OH Tax in Bitcoin' business, where the bitcoin payment firm pays an OH business's taxes in bitcoin (from various dodgy sources) and gets paid in USD by the firm whose tax is being paid, maybe at a discount since you are washing dirty bitcoin.
This would be a boon for those businesses in the US getting side-lined by banks because of incoherent federal/state laws - for example those states with legal marijuana where the banks won't take the business proceeds due to the fear the Feds will crack down and nix their banking license. Now they can get paid in bitcoin and wash it through OH, or so at least it would seem at first blush.
I think your initial idea is plausible, but some of your examples, not so much.
Keep in mind that only Ohio residents will be able to do this. People outside of Ohio won't be paying taxes there [unless it's a business with a presence there, in which case 'Ohio resident' for that part of the business].
Business taxes [like license fees] usually aren't that much. It's not like income taxes which, for an S corp (or LLC, pretty sure), you pay with your personal taxes plus whatever your state demands of you [in the case of Cali-fornicate-you, a minimum $800 tax].
So the amount being paid with bitcoin is probably very small. And as it's taxes owed to a state, it's probably not practical to launder bitcoin income this way. And I really don't think they'll except gross overpayments. I've never thought much about it, but I'd guess that you would have to pay it as "extra withholding for next year" or something. There's ways to do THAT in lieu of a refund, for example. But getting a whopping tax refund because of a gross overpayment will probably get you an audit. Saying you owe the money when you don't is grounds for perjury, believe it or not. And if you're laundering bitcoin, you do NOT want an audit.
So yeah, actually making use of tax payments for money laundering, not practical. Probably just as well, right?
One would hope they have taken into account the money laundering angles.
Does indeed look to be made for this but in that case BitPay is probably likely to be on the hook. BitPay's play is obviously to encourage more people to use a volatile currency as a means of payment within a dollar economy. Hm, something seems odd in that statement, can't quite think what.
My view is that it's not really going to be a "game-changer", or "shift expectation", "disrupt" or "leverage" anything (you get where I'm going) -nor is it intended as such. Someone wants to be seen as "on top of things", perhaps to attract the next bubble-based companies, or perhaps to boost one's resume for the after-office life.
In short, "blockchain" hit the mainstream hot-topic list recently, some amount of political piggybacking is to be expected.
That's still pretty tame. I've heard suggestions of using blockchain-based mechanisms for core Bank applications -ones that are subject to very tight real-time legal requirements, and hence necessarily centralised by design. For some people "distributed" and "centralised" are just words, while "blockchain" is a career opportunity...
Bitcoins are really wasteful. How many megawatt-hours does it take to process a bitcoin transaction these days? They're wildly fluctuating in value and fiendishly difficult to use, and very expensive to convert.
The only purpose for bitcoins is scamming, money laundering and basically any criminal activity. They have no real-world applications other than that, because all other 'applications' are just a hobby.
Unless your turnover is in Bitcoin (unlikely unless you are on the list of activities above) how is it economic to convert your hard-earned into Bitcoin to pay your taxes plus a 1% charge? "No no, my tax bill isn't high enough, have some more ..."
Who will be the first hacker to gain access to a large Bitcoin tax transaction (obviously the Bitcoin will be "just resting" in BitPay's account, they will have nothing to do with it) and funnel it off to lands-unknown? Who would be financially responsible for that loss given that the transaction takes a significant time when, as I understand it, the funds would be in an ownership limbo ...?
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