KMK Law Corporate & Securities Blog

Despite a cloud of perceived volatility in value and a stringent regulatory environment at the SEC, cryptocurrencies are still making strong progress toward mainstream use. Beginning on November 26, 2018, Ohio became the first U.S. state to accept Bitcoin for tax payments in an effort to become a national leader in blockchain technology. Initially, Ohio will only allow businesses to use Bitcoin to pay for taxes, but this offering may eventually expand to individual filers. Moreover, the Ohio State Treasurer has expressed an interest in expanding this process to other cryptocurrencies.

Process
Businesses who elect to pay taxes with Bitcoin can do so through registering with the tax payment portal located at http://OhioCrypto.com/. Once registered, these business will be allowed to pay for 23 different types of business taxes, including sales, utility and employee withholding taxes. A third-party service provider, BitPay, will then process all tax payments made through this tax payment portal. Following the submission of payment to Bitpay, Bitpay will convert the Bitcoin into dollars that will be paid to the Ohio State Treasurer’s Office.

Proposed Benefits
BitPay, as the payment processor, will set the Bitcoin exchange rate for a 15-minute time window for each payment. To protect the business against any market fluctuations, BitPay will assume the risk of exchange rate variations occurring within the window. Also, OhioCrypto.com will charge a 1 percent commission for each payment, which is attractive when compared to the 2.5 percent fee charged for tax payments made via credit card. Finally, in addition to the ease with which payments can be made through the portal, the use of OhioCrypto.com should provide greater transparency in the tax payment process by allowing for second-by-second tracking of payments.

A press release issued by the Ohio State Treasurer’s Office on the launch of OhioCrypto.com can be found here.