Colorado has become the first state in the United States to accept bitcoins to pay taxes.
Gov. Jared Polis announced the implementation of the new payment method Monday at Denver Startup Week, according to a report from Axios Denver.
According to the report, citizens can use cryptocurrency to pay individual income tax, corporate income tax, sales and use tax, withholding tax, severance tax and special fuel tax.
The state government’s Department of Revenue now lists “cryptocurrency” as a payment method among the more established credit and debit cards, ACH debit and credit, and cash.
However, users interested in parting with their bitcoin holdings to pay Colorado state taxes must use a PayPal account.
“Only personal PayPal accounts can pay with cryptocurrency,” the Colorado Department of Revenue details, adding that the user must have the entire value of their bill in a single cryptocurrency in their PayPal Cryptocurrency Center.
Citizens paying their taxes with cryptocurrency will be charged an additional $1 plus 1.83% of the payment amount in fees.
US states have been vying for the trophy of the most cryptocurrency-friendly jurisdiction as they look to attract workers and businesses from the new remote economy.
However, it’s hard to justify paying taxes with bitcoin, especially in Colorado’s fixed deal with PayPal. While the user would likely forgo future capital appreciation in the price of bitcoin by doing so, that purchasing power would not be transferred to Colorado, as the state does not intend to hold BTC or cryptocurrency on its balance sheet.
