UK government bitcoin taxes

Eddie Hughes, a UK Member of Parliament (MP) has suggested the UK should accept local taxes in bitcoin.

Inspired by Ohio’s recent decision to allow bitcoin payment for taxes, he said: “you’re either ahead of the curve or you’re behind the curve, and our country is in an interesting position right now — we need to be seen as a progressive country.”

The Conservative MP, who describes himself as a “crypto enthusiast with amateur knowledge,” says the British government has a duty to educate itself about blockchain technology. 

“It just feels like it gets talked about a lot, wherever you go in the UK, and as MPs we have a duty to understand it,” he said.

Speaking to The Express, Hughes advocated the payment of local (council) tax with bitcoin, but hinted that other options should be considered.

“What’s to stop us being able to pay council tax and other bills with bitcoin?”

Hughes was also inspired by the Royal National Lifeboat Institution, which accepts donations in cryptocurrency. Adoption and mainstream understanding remains a concern for Hughes: “it needs to appear like an app that people will use so they can become familiar with it in a safe and secure way.”

The MP says he’d love to trial the scheme in his constituency near Birmingham and strikes an optimistic tone for the future: “We are at a crossroads and we’re about to determine our future – one in which taking the lead in this field could prove very beneficial.”

Source: The Express

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pay taxes with bitcoin

As of today, Ohio becomes the first state in the US to allow businesses to pay taxes with bitcoin. Ohio edges out Arizona, Illinois, and Georgia which have seen similar initiatives fail to pass state legislatures.

The move is a stamp of legitimacy from the US authorities for a cryptocurrency that has, until recently, been derided as a mode of payment only useful for criminals, speculators, and money launderers.

We should point out that the government itself won’t directly accept or process bitcoin. It will be converted through a third-party payment provider, Bitpay, and the taxes will still technically be paid in dollars.

Individual Taxes to Follow

Businesses operating in Ohio will be the first to benefit from the new initiative. The state of Ohio has launched a new website, ohiocrypto.com where businesses can register and begin the tax payment process with bitcoin.

The site lists 23 taxes that are currently payable in cryptocurrency, including employee withholding taxes and sales taxes.

While it’s not yet possible fo individual filers to pay with bitcoin, the state of Ohio is working on it, as well as the potential to accept other cryptocurrencies.

“I do see [bitcoin] as a legitimate form of currency,”

Ohio Treasurer Josh Mandel is one of the few government voices to publicly champion cryptocurrencies. Speaking to the Wall Street Journal (paywall), he said “I do see [bitcoin] as a legitimate form of currency,” granting it some authority in the eyes of government.

Back in August, Ohio passed a law that legally recognized blockchain data, while Ohio speaker Ryan Smith confirmed Ohio’s grand plans: “because this is so new and this is just beginning to take shape, we can position Ohio out front.”

You might also be interested in: A Giant Blockchain Town is Being Built in the Nevada Desert

No Legal Status, Yet

It’s important to note the move does not give bitcoin any legal status. In order to accept the payments, Ohio will use a third-party payment provider, BitPay, to convert bitcoin to US dollars. In other words, the state will not process or hold bitcoin itself. The taxes are still technically paid in dollars, just routed through a third-party.

While this is a stamp of approval for cryptocurrencies, it does not mean the government accepts or processes bitcoin directly.

Other States to Follow?

Ohio has kicked down the door and other states may soon follow suit. The Arizona Senate approved a similar bill earlier this year, but it was knocked back by the House of Representatives.

Representatives in Illinois also submitted a proposal to accept bitcoin back in February, while two state senators in Georgia proposed a similar bill in early 2018.

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finland

Tax authorities in Finland have begun matching bank records to cryptocurrency transactions in an effort to track down suspected Bitcoin tax cheats.

English-language Finnish news outlet Metropolitan.fi reports that Timo Puiro — the tax office’s inspector general — has identified at least 3,300 citizens who owe taxes related to gains accrued while trading cryptocurrencies. Collectively, they owe about 30 million euros in capital gains taxes — a tenfold increase from 2016.

According to the report, the tax office has taken advantage of “generous access” to bank transfers and other financial data, which officials have been able to successfully link to Bitcoin transactions from cryptocurrency exchanges and other trading platforms.

Using this data, the tax office has been able to identify Finns who taxes on their cryptocurrency gains, and it will scrutinize their annual tax returns to determine whether they pay them.

The latest date that taxes can be filed in Finland is May 15, so it is unclear whether residents are paying their cryptocurrency-related taxes.

However, the fact that many cryptocurrency investors do not report cryptocurrency trading on their tax returns is well-documented. US financial services company Credit Karma has said that among users of its tax preparation software cryptocurrency reporting is at “negligible levels,” and the Internal Revenue Service (IRS) has contracted with a blockchain forensics firm in the past to help the agency track down Bitcoin tax cheats.

Cryptocurrency exchange Coinbase was also recently forced by a court order to provide the IRS with access to customer records for high-volume users.

As BlockExplorer reported, tech conglomerate Amazon recently won a patent for a data streaming marketplace that would transmit information in real-time. The company identified catching Bitcoin tax cheats as one potential use case for the marketplace. Under the system, law enforcement agencies could subscribe to data streams for Bitcoin transactions and shipping information or bank records and then use in-app analytics tools to identify correlations in the data.

Featured Image from Pixabay

Arizona Could be the First State to Accept Bitcoin for Tax Payments

Arizona could become the first state that allows its citizens to pay their income taxes in Bitcoin. Senator Warren Petersen is sponsoring Senate Bill 1091 (SB 1091)–a bill that would allow income taxes to be paid in Bitcoin and other cryptocurrencies by the year 2020 if approved.

The bill passed Senate on Thursday–February 9th, 2018–and will be moving on to the House. Although public opinion has trended towards optimism regarding digital currencies of late, Arizona legislators have been considering everything that could possibly happen if the Arizona Department of Revenue (ADoR) allows citizens to pay their income taxes in Bitcoin–including what could go wrong.

Volatility

For instance, what if a citizen paid their income taxes in Bitcoin and minutes later there is a price swing of 10%?  When the ADoR receives confirmation on the transaction, the amount they will receive is most likely going to be worth less than what the citizen intended their income tax payment to be.

During Thursday’s hearing, Senator Steve Farley from Arizona said,

“What this does in effect is transfer the volatility risk off the person paying their taxes and onto the Department of Revenue and thus all other taxpayers. We take American dollars at the Department of Revenue to pay taxes. I think American dollars ought to be good enough.”

What Farley and other legislators in opposition to the bill are worried about is the volatile nature of Bitcoin. The Department of Revenue (DoR) would prefer possessing less volatile currencies with a more predictable store of value. For this reason, Bitcoin and other cryptocurrencies are an extremely unattractive option for the DoR. For example, according to BlockExplorer, the price of bitcoin was $20078.40 on December 17th. on December 22nd–the price of Bitcoin was $12015.10–$8063.3 less and a 40% decline from the December 17th price of nearly $20,000.

Ultimately, it is up to the House to determine the future of SB 1091. Despite the outcome–whatever it may be–it is a good sign that Blockchain related discussions and debates are spreading from r/Bitcoin, Twitter, and Medium.com and beginning to appear in college lecture halls and courtrooms. Although the future of cryptocurrency is an uncertain one, the fact that a digital asset and its underlying technology is being discussed by lawmakers and financial overseers in a professional setting is a good indication that there will be future growth in the industry.