Ohio will accept Bitcoin for corporate tax payments via Bitpay | Hacker News Reader

Ohio will accept Bitcoin for corporate tax payments via Bitpay

techcrunch.com

106 pointskaboro96 comments

Among the online services I would like to see my state add, enhance, or simply fix, I do not prioritize accepting bitcoin for tax payments very high in the backlog.

It is quite low effort, and probably quite a good value.

Would you be willing to expand on why you think it's probably quite a good value?

Not GP, but if you are a person/business that has a lot of BTC, it's not hard to see the value here. When Dish Network added BTC payment as an option, it was really nice for me.

For someone who doesn't do the bitcoins, it was probably just clutter on the website. It's all perspective.

Exactly what is Bitcoin accomplishing in this scenario? Ohio won't actually accept them; rather, it contracts with a third party that immediately exchanges them for USD, which is what Ohio actually accepts. Ohio maintains no BTC inventory nor any exposure to Bitcoin. Not only that, but this apparently binds taxpayers to Bitpay's exchange rate.

What is this doing that you couldn't accomplish by simply selling BTC and remitting in cash?

Reducing friction when interacting with government. The alternative of using a credit card carries stiff fees (~2%) [1].

[1] https://www.irs.gov/payments/pay-taxes-by-credit-or-debit-ca...

This program charges at least 1% fees. The FAQ is fairly nebulous on the max fee.

Seems like there are easier ways to get payment processing fees lowered for Ohio than exposing tax payers to currency markets.

I doubt after you pay the transaction fee, and bitpay takes it's cut you'll be paying less than 2%.

That sounds suspiciously like the owner of the conversion service knew somebody within Ohio government's IT management, for values of "knew" ranging from "friends" to "bribed".

You do realize that within a margin of about 0.1%, 100% of Ohio taxpayers don't do the bitcoins?

Value of tax liabilities and distribution of the debtors current holdings (BTC vs $) is a better metric to evaluate acceptable payment forms. Ohio state income tax rate is ~ 0.5% - 5%. Lots of 'businesses' don't owe anything. Accepting BTC may increase the likelihood of {high $ debtors who hold primarily BTC } actually voluntarily submitting payments. These 'businesses' would otherwise will be difficult and expensive try and to collect from.

I left Ohio because the priorities were Obergefell v. Hodges and sportsball. Meanwhile rural areas like Akron are routinely devastated by opioids.

Yay someone else calls it sportsball

    The state is working with the cryptocurrency
    payment startup BitPay to handle its payments,
    which will convert the bitcoin to dollars.

Not sure if this really counts as 'accepting Bitcoin for tax payments'. You surely can pay in anything via a middleman, as long as the middleman sends dollars to the state?

That's a good point, and should be mentioned, but I think it is also important to remember that businesses "accept Visa for payments" via a middleman (e.g, Braintree or Stripe) and that is still considered the same as "accepting Visa" as far as the general public and shop owners are concerned.

> and that is still considered the same as "accepting Visa" as far as the general public and shop owners are concerned

Which is itself accepting a payment network’s promises to deliver bank deposits to you which are, themselves, a promise by a bank to redeem to you electronic or physical dollars. Ohio is replacing the Visa layer with a Bitcoin layer; all else is the same.

Seems like fake news. The state of ohio will not accept bitcoins -- they just "allow" you to pay your taxes using bitpay, which is a service that will convert your bitcoin to USD on the fly. How is this any different to what you could always have done, i.e. selling bitcoins for USD first and then paying your taxes with the USD?

Sorry your comment has been downvoted to grey. Indeed, the headline is nonsense, payment of tax will continue to be in USD. This is a very silly headline and it's embarrassing seeing it being upvoted on HackerNews.

I would guess it's the "fake news" part that is triggering the downs. Using that phrase is a sure fire way to piss off a subset of all side, but especially people who support/like what the article is saying.

I know it's considered low-quality to discuss voting here, but something is becoming extremely shady with the voting on this forum. Boo be the share of all downvoters too lazy to express their resent in writing and reasoning. Praise be for otterley who bothered to explain it to OP and did his tiny share in building a better world. And wtf for those who downvoted his comment (I'm especially baffled by that one)

Technical inaccuracies in reporting do not make an article "fake news." Fake news is the intentional publication of stories purporting to be news that have no factual basis for the purpose of misleading the public.

Technical details seem to matter though. Using the definition of "paying taxes" that TC seems to be using, you could have always paid your taxes using, for example, magic the gathering trading cards. You just need to find somebody that will buy them from you for USD first. I wonder why one of those made the headlines now and the other one didn't...

If you wanted to pay your Ohio taxes using MtG cards, you would first have to find someone to exchange those cards for USD. After you did that, you'd have to go and file your taxes with the Ohio Department of Taxation.

These would be two completely independent transactions, involving agreements between you and two entities (whoever you exchange your MtG cards with and the Ohio Department of Revenue). There would be no connection whatsoever between the site where you arrange to sell your MtG cards and the site where your pay your taxes.

OhioCrypto.com is operated by the state of Ohio. When you register, the TOS says it is a contract between you and the Ohio Treasurer of State. To pay your taxes in Bitcoin through OhioCrypto.com, you do not first change them to USD via some third party. You present the Bitcoin payment information and your tax information, much the same way you would present your credit card information on a site that accepts credit cards.

OhioCrypto.com then uses BitPay to process the Bitcoin payment information, much the same way a credit card accepting site might use Authorize.Net or Braintree to process the credit card information, receiving eventually USD deposited to their account.

In your MtG hypothetical, in no sense would Ohio be accepting MtG cards. By the time they are involved, you are giving them USD. It would not make headlines because Ohio has no involvement.

With OhioCrypto.com, you are giving Ohio your Bitcoin payment information, and Ohio is dealing with having that payment information used to exchange your Bitcoins for USD. This makes headlines because Ohio is directly accepting Bitcoin payment information at a state run website.

Edit: updated to not imply Ohio holds Bitcoin, in response to tptacek's observation below.

According to the FAQ, that's not the case: Ohio never holds Bitcoin for any amount of time, and payments are actually occurring through Bitpay.

Those sound synonymous to me. It’s a payment method for a transaction which in this case is priced in USD. Not much different than accepting MasterCard or checks to pay off a USD balance. It’s convenient for some people, and shouldn’t affect or upset anyone else assuming the government didn’t spend a ridiculous amount of money to implement the payment method.

It seems pretty weird to watch the collective comment pool rage against this change. Seems to fall largely into a couple groups: "people who think it's a waste of time", and "people who are upset that Ohio's official currency is still USD".

Aren't there more interesting responses possible for this move than outrage? Right now this seems limited to businesses, I'm curious why specifically target them instead of all taxes (given that the backend infra seems like it would be the same for both). How does the pricing work given volatility (is there potential that you'll pay taxes and the price will shift such that you owe more / get a refund after the fact)?

The pricing part is explained in the FAQ, they are using a third-party so the state of Ohio never sees crypto. I assume that the exchange rate has the volatility risk baked into the conversion price, so the cost is amortized across all payers.

The fact that conversion is done at time-of-payment is clear, yes. But as you say, you're assuming that shifts in price are being factored in (the implication seems to be "by BitPay"). I'm curious if that's actually the case.

Am I the only one who sees this as a move on Ohio's part to get its residents to "accidentally" disclose their Bitcoin assets by making a payment from their "hidden" stash invested in Bitcoins? You pay your taxes from your Bitcoin wallet? Oh how nice! Now here is your state subpoena to disclose the FULL value of your (possibly non-US or offline) Bitcoin wallet. I have a friend who lives in Portland (Maine) and used his BTC to pay some city fine. A month later got a formal order from the state's revenue collection service to file a non-US asset disclosure form and report ALL of his BTC in possession. And mind you, he is NOT a US citizen or even permanent resident. He is in the US on a tourist visa. A US citizen/resident could probably face criminal charges after disclosing he/she has Bitcoin stash they failed to previously report.

> he is NOT a US citizen or even permanent resident

Not paying taxes on a publicly-ledgered asset with a well-accepted monetary value that you then disclose to a government is the height of stupidity. If your friend’s home country has any tax treaties with the United States, I’d encourage him to get his paperwork in order with them.

As far as I know, he owes almost no taxes. He is a resident of Monaco and it has no taxes on its residents AFAIK. The state of Maine actually invoked FATCA compliance as a legal backing for filing the form. I find that strange as FATCA is a federal law and if anybody would be enforcing it would be the IRS, but of course he is not going to argue with Main so he just ignored the form and left a month later. Probably not very smart on his part for ignoring it but he said there is no way he going to report all of his BTC assets to Uncle Sam simply for being a tourist visitor. However, for a US citizen/resident it could very well end up pretty badly as reporting assets that had not been taxed so far will get you state and federal tax (with interest) AND probably some fines. Not reporting it is even worse because the state (and IRS) now knows you have a BTC wallet and will assume you are hiding assets in it, which is both a state and federal felony. Anyways, it would be interesting to watch how this plays out.

I'm not sure why this would be a goal. There is nothing illegal about holding something valueable. It is only taxable events, such as selling your bitcoin, that require disclosure to the government (so that they can tax you, obviously).

There's nothing illegal about holding it, but due to tax law ambiguities and changes, almost every person holding it is guilty of some tax evasion/fraud. As governments get more and more desperate for revenue to back their spending (this is especially true of states who can't print money like the Fed can), I certainly don't want to be on their list of "likely criminals" they can come after.

Holding Bitcoin is no different, legally, than holding bars of gold.

And yet many people hold gold, or other precious, non USD materials, but nobody freaks out about their about tax fraud risks.

If the government starts coming after everyone's non USD commodity holdings (which, to be fair, isn't entirely unprecedented. Owning gold was illegal at one point), then we have much bigger problems than just as it applies to the comparatively tiny crypto market.

So when they collect that bitcoin do you have to pay capital gains tax on the amount you paid then this year on next year's taxes? If you pay the capital gains tax next year in bitcoin, do you have to pay the capital gains tax on that payment the year after that, etc.?

I'd assume yes, just the same as if you sold bitcoin for USD yourself in order to pay the taxes.

Ohio isn't making a claim that they're changing their official currency to Bitcoin, any more than a site that adds Paypal support or Apple Pay support is claiming that their new currency is AppleBucks.

For thoroughness, it’s also just the same as if you sold anything else that’s subject to capital gains tax in order to pay your taxes, which I suspect is not a rare occurrence.

This is interesting because now you could really leave the dollar while living in America. After all you can live your whole life in BTC but still need to come up with USD in April to pay taxes.

Probably too late though, I think true BTC believers are few and far between these days.

The US Federal Government doesn't accept BTC.

from the article: <<The brain child of current Ohio state treasurer, Josh Mandel, the bitcoin program is intended to be a signal of the state’s broader ambitions to remake itself in a more tech-friendly image.>>

So, basically "We hear this BitCoin thing is in fashion. Let's add some of that".

https://www.youtube.com/watch?v=C-q4bEULG64

Not from US, but I see this trend in my country also.

It's nice to see governments to embrace technology but, it will be nice to start from the ground up and what I would like to see is: modern websites, one mobile app for everything, transparency of the money they spend, multiple payment options for taxes and transportation, simple online forms, digital signatures, etc.

They take a step, then skip 100, do another one and then: "oh we are done here, we embraced technology"

Oh yes, this won't backfire in any way.

This is probably the most significant thing to happen in blockchain history and is philosophically in line with the stated original claims of the Bitcoin whitepaper from Satoshi.

That means Ohio is putting the USD in competition with cryptocurrency for the primary thing the USD is used for: Paying Taxes. Federally that's going to remain USD of course, so it's not an existential threat for the Fed, but if enough states move to crypto as an option for tax payments the Treasury/Fed is going to have to make some major moves to prevent it spreading.

I really want what you said to be true, tho I'm a little more skeptical than you. I don't see this as competition at all, since it will be immediately exchanged for USD, and I would assume the tax bill will be issued in USD and the equivalent BTC amount will be calculated at payment time.

I'm also pessimistic that this will be used. The new taxes on cryptos that the feds put in place have done a great job at icing speculation and making people's lives a living hell should they engage in crypto-trading (a pretty darn good disincentive). I think the federal government is well on its way to killing crypto currencies already.

One of the options I see as possible is that the USGov will effectively "acquire" crypto of it gets used enough. They would do this by mandating parity with the USD so that it's simply another instrument of the USD. Would take a lot of legislation, and work but it's possible to do and preferable to allowing a competitive currency inside the states.

> That means Ohio is putting the USD in competition with cryptocurrency for the primary thing the USD is used for: Paying Taxes.

That's not the primary thing the USD is used for. Paying US federal and some other taxes is one of several things that the US dollar is the sole thing used for, but that is very different than being the primary thing it is used for.

But unless they are denominating tax debts in Bitcoin, it's not meaningfully different than exchanging bitcoins for dollars to pay taxes, just a little more convenient.

The primary federally required thing citizens have to do is pay taxes. Legally you cannot pay taxes in any other currency than USD. You can legally buy or barter for goods in many other ways, but USD is the only legal means for paying federal taxes.

It sounds like your definition of 'primary' is at odds with everyone else's.

> The primary federally required thing citizens have to do is pay taxes.

Sure.

> Legally you cannot pay taxes in any other currency than USD.

Sure. But though that two sentence pair is both true and includes the word “primary” and a reference to “USD” and paying taxes, it doesn't support th conclusion that the primary use of USD is for paying taxes.

the primary thing the USD is used for: Paying Taxes.

How can that be given so many taxes are some fraction of some other transfer of USD?

yeah only a state like ohio would jump on the blockchain bandwagon in such a fashion... probably hired some consultants to validate this "innovative" move.

Is someone in the Ohio government losing or lost a ton on their BitCoin investment as it's tanking something serious now?

This is a bit strange especially with Bitcoin tanking.

This move was probably planned about a year ago, back when Bitcoin was over $10k. The wheels of government turn slowly, and now that they've turned, you're right that it looks pretty strange to announce this right as the market is crashing.

Exactly. I would also add "big business" to this too. I bet we see a few different BTC products/services start to get announced that were probably put in motion this time last year.

I guess if they convert in real time it doesn't matter, it's just a gimmick, they get dollars. Let Ohio accept Bitcoin and keep them...they wont.

In what way is it a gimmick? Ohio seems to be taking the stance that folks may want to pay in bitcoin, so they're offering that as a payment option. Whether they take the bitcoin and convert it into something else doesn't seem to impact that.

Why not accept gold too then? Some people may want to pay their taxes in gold. I'm curious how much money was spent to get this system in place, and what the plan is when the bitcoins are then in the Ohio treasury, especially if the price continues to drop on BTC.

This plan doesn't cause Ohio to hold any bitcoins in their treasury: they're reconciling them for USD at time-of-payment via BitPay.

And sure, they could support paying in all kinds of things. But Bitcoin has a decent wave of popularity among humans, so they're taking a swing at supporting it, similarly to how a variety of online retailers have. It seems like a weird case to see them add support for a popular method of payment and respond "but why not gold".

The point I was making (though I didn't really say) was not that gold should be used, but that someone can simply convert their own BTC via the normal means to USD and then pay with that, same as you could sell your gold. Why even offer this service? Are there REALLY enough people interested in paying their taxes in BTC that this service is in any way worth providing?

> Why even offer this service?

As stated in the article, it's one of several symbolic gestures being made in an effort to market the state as “tech friendly”.

How does this accomplish that though? What tech people are trying to pay their taxes in BTC? The best way to make your state more attractive to tech business is to improve schools and services that actually affect people, not offer bizarre programs like this. I very clearly have priors that I think this is absurd, so maybe I'm just not looking at things charitably. I just don't get who this is for, and I expect it to be underused when it comes tax time.

> someone can simply convert their own BTC via the normal means to USD and then pay with that, same as you could sell your gold

I don't know if you've tried to sell gold, but it's a little bit more involved and difficult than exchanging BTC/USD

But that's what this service seems to be doing, right? BitPay's raison d'etre seems to be that service exactly.

Edit: misread the parent comment.

Not sure I understand your question. BitPay exchanges BTC for USD, not Gold for USD. Gold typically requires a physical exchange of goods, and can't be done electronically.

I originally misread your comment.

haha cool, no problem. Thanks for the discussion btw :-)

You can also own gold through an ETF or some other vehicle, which is pretty easy to trade.

There's also a concern of practicality and pragmatism. Gold can't be sent electronically; USD and BTC can. Liquidity is a pretty strong reason.

They are using BitPay, they get dollars, so it's a gimmick. "Receive settlement for Bitcoin and Bitcoin Cash directly to your bank account in your own currency, with zero price volatility or risk."

You're just repeating yourself.

If the headline said "Ohio switches all operations to be Bitcoin-only" and then the fineprint said "we're turning all the bitcoin into USD immediately using BitPay", that would be a "gimmick".

They said "we're going to let businesses pay taxes via bitcoin", and they are. What do the businesses care if they convert the bitcoins to USD, gold, or chickens immediately after?

Umm, why not?

If Ohio wants to go through the process of allowing alternative commodities to be accepted as payment, then good for them?

> Why not accept gold too then?

Because as the article states explicitly this is a “tech friendly” image generating marketing stunt; accepting gold doesn't serve that purpose.

With the instability of Bitcoin prices it would be insane to keep them. If the Bitcoin price drops they would lose a ton of money and would have to get that back somehow.

As someone who has tried to start some tech startups in Ohio I can say that this is the least relevant feature I'd like to see.

What feature(s) would you like to see?

How about: the ability to rent at little or no cost unused offices, Access to funding for "moonshot" projects, Have the state declare certain groups certified startups for 1-5 years to help them get momentum and exposure. There are many such simple things that could be done to help and create the network of success they want to draw in via tech

Why is bitcoin promoted so much for payments instead of stable coins(i.e USDT)?

So do I have to pay taxes for the taxes I just paid on my Bitcoin?

If you converted Bitcoin to cash to pay your taxes (which is how Ohio's service actually works) and that resulted in a capital gain (you originally paid less for that Bitcoin than it's worth today), then you'd need to pay taxes on that capital gain.

This is no different than selling any other asset (stocks, a house, etc.) to get cash to pay your taxes.

Sounds like a huge opportunity for hackers.

What kind of opportunities? To pay their taxes with stolen Bitcoins? It wouldn't be hard to trace it back to them :-)

Well yes, I'd very much like a delivery of headaches. We here at Ohio have been craving those for a while now!

What happens to Ohio's treasury if BTC's value halves and stays in a bear market for two years? Or worse, never recovers?

Ohio is not receiving Bitcoin. They are locking in the USD value at time of payment and get that.

Please read the article. They won't be holding BTC. They are using BitPay (which exchanges it immediately for USD).

> What happens to Ohio's treasury if BTC's value halves and stays in a bear market for two years

Nothing, because like most other traditional economy outlets “accepting” Bitcoin, they are just contracting with a processor that actually accepts the Bitcoin and pays the State in dollars.

Bitcoin is used just as a payment system. The state receives USD from anyone who handles the payment.

The price of Bitcoin has been shown to be influenced by a small number of holders, I don't understand why any government would allow for services to be paid with such a volatile "currency"

Ohio gets USD - never actually touches Bitcoin.

I hope they pawn that monopoly money for the real deal immediately after collection.

Accounting for crypto is already an unstandardised accounting and control nightmare. It'll be cashed out on point.

Please don't post unsubstantive comments here.

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