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Colorado Residents can now pay taxes in crypto payment

Colorado residents can now use cryptocurrency to pay state taxes, a move that Governor Jared Polis claims carries lower fees than using a credit card. Colorado is collaborating on the project with PayPal’s cryptocurrency division. The state’s Department of Revenue specifies a service charge of $1.00 plus 1.83% of the total for such transactions.

Direct debit taxpayers are not charged any additional fees. The fee for using a credit card is $0.75 plus 2.25% of the net payment.

The assets that the state would accept were not mentioned by Jared Polis. He further stated: “We’re just showing again, from a customer service perspective, how Colorado is tech-forward in meeting the ever-changing needs of businesses and residents.”

For the first time, residents can use cryptocurrencies to pay their personal income tax, business income tax, sales and use tax, withholding tax, severance tax, and excise fuel tax.

According to the Department of Revenue, payments can only be made using one cryptocurrency and must be made entirely through personal PayPal accounts, not business accounts.

In an interview conducted in advance of the ETHDenver conference in February, Polis stated, “We are promoting Colorado as the centre of the crypto economy. We not only have excellent laws and regulations here, but also a fantastic ecosystem for innovation.

Although PayPal accepts bitcoin, bitcoin cash, ether, and litecoin, the Department of Revenue’s website does not specifically list any acceptable cryptocurrencies.

Taxpayers might be subject to more taxes

According to Jared Polis, the government will have a transactional layer there because the budget is still in dollars, and expenditures are still in dollars, and, of course, they don’t want to take the speculative risk of holding cryptocurrency.

If taxpayers choose to use cryptocurrencies, they should be prepared for future fees. They will be in charge of documenting these transactions and figuring out tax liabilities, according to legal experts.

The state will begin accepting cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH) as payment methods for state taxes, according to a promise made by Governor Polis earlier this year. A law that exempted cryptocurrencies from the securities laws that apply to other financial instruments was signed by Polis in 2019.

The state of Colorado’s crypto decision comes at a time when the majority of industry-wide digital assets have seen more than half of their value decline as a result of challenging macroeconomic conditions.

The first US state to accept cryptocurrencies as a form of tax payment is Colorado. While this is going on, many nations, states, and cities have adopted cryptocurrency payment methods for citizens to pay their taxes.

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