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Bill

LC 3160

Require DOR to accept income tax payments in cryptocurrency

2025 Regular Session

The bill would require the Department of Revenue to accept cryptocurrency as payment for income tax liabilities, with rules for valuation, processing, and security.

(LC) Draft Delivered to Requester
#financialinstitutions(seealso:credittransactions) #informationtechnology(seealso:communications) #revenue #state #rulemaking #taxation(generally) #taxation--individualincome
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Bill Summary · LC 3160

Summary: LC 3160 – Require DOR to accept income tax payments in cryptocurrency

Overview

LC 3160 is a draft bill that would require the Department of Revenue (DOR) to accept cryptocurrency as a form of payment for income tax liabilities. Introduced on December 13, 2024, the bill is currently in the drafting process (LC – Draft Delivered to Requester). The legislative actions trace a timeline from drafter assignments in December 2024 through early February 2025, moving from legal review to final drafting stages.

Purpose and Intent

  • The core purpose appears to be enabling taxpayers to pay their income tax obligations with cryptocurrency rather than only with traditional fiat payment methods.
  • The bill sits at the intersection of Financial Institutions, Information Technology, and Taxation, signaling a cross-cutting approach that would require regulatory, IT, and fiscal policy changes.

Key Provisions (illustrative, pending text)

Note: The exact text will determine precise mechanics, but typical features such bills propose include:
- Authorization for DOR to accept cryptocurrency as payment for individual and/or business income tax liabilities.
- Definition of acceptable crypto assets (e.g., certain major cryptocurrencies) or broad authorization to accept any blockchain-based tokens.
- Valuation and conversion: a mechanism to translate the cryptocurrency payment into the equivalent USD tax liability, likely using a price source or market rate at the time of payment, with clear rules for partial payments, rounding, and handling volatility.
- Processing and settlement: procedures for processing crypto payments, including timing (e.g., payment receipt vs. final settlement in USD) and accounting treatment in DOR systems.
- Recordkeeping and reporting: requirements to maintain audit trails, receipts, and compliance documentation.
- Security, AML/KYC, and fraud prevention: safeguards to prevent illicit activity and protect taxpayer funds.
- Rulemaking authority: potential delegation to DOR or an accompanying agency to establish operational details, timelines, and enforcement mechanisms.
- Fees and costs: any associated processing fees or administrative costs borne by the state or taxpayers (if applicable).

Who Would Be Affected

  • Taxpayers who hold cryptocurrency and prefer paying taxes in crypto.
  • DOR and state IT systems, which would require updates to accept, convert, record, and secure crypto payments.
  • Tax administration and enforcement agencies, which would need new compliance and monitoring frameworks.
  • Crypto-service providers and payment processors that might interface with state tax collection systems.

Procedural and Timeline Aspects

  • Introduced: December 13, 2024.
  • Status: LC – Draft Delivered to Requester; current stage in the drafting process.
  • Notable actions include: final drafter review, assembly draft, legal review, and input/proofing between January and February 2025, with a February 10, 2025 entry indicating readiness for delivery.

Potential Impacts and Considerations

  • taxpayer flexibility vs. volatility: cryptocurrency values can fluctuate between payment initiation and settlement, requiring clear valuation rules.
  • IT and security requirements: significant upgrades to DOR’s infrastructure and cybersecurity posture would be necessary.
  • Regulatory and compliance implications: alignment with existing financial, AML/KYC, and tax reporting standards.
  • Implementation timeline: depending on final text, adoption could require phased rollouts, rulemaking, and pilot programs.

Next Steps to Track

  • Review the official bill text when released to confirm the exact scope (which taxes, which crypto assets, valuation method, and timeline).
  • Monitor DOR rulemaking announcements for implementation details and deadlines.
  • Assess fiscal impact analyses and any cost estimates associated with system upgrades.

Compiled from official sources — confirm details with the bill’s official record.

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