You can’t pay Ohio taxes with bitcoin … for now
Taxpayers accustomed to paying Ohio taxes in bitcoin will have to go back to remitting in old-fashioned cash, at least for a time. On October 2, 2019, Ohio State Treasurer Robert Sprague announced the immediate suspension of OhioCrypto.com, the state’s portal for accepting cryptocurrency tax payments.
OhioCrypto.com launched under Sprague’s predecessor, Josh Mandel. The system enables taxpayers to send bitcoin payments to a third party, BitPay, which then converts them to cash. Therefore, the Ohio Treasurer never holds the cryptocurrency, as all deposits are made in U.S. dollars.
The treasurer’s office has been reviewing the “creation and operation of OhioCrypto.com” since Sprague took office in January 2019. It now believes that BitPay is acting as a “financial transaction device.”
That would be fine if BitPay had gone through “a competitive selection process” and been “authorized by the State Board of Deposit,” which consists of the Attorney General, the Auditor of State, and the Treasure of State. However, it appears that it didn’t and wasn’t.
Sprague isn’t against accepting cryptocurrency on principle. In fact, he says, “It is vital that Ohio explores innovative, new technologies and processes that continue to drive Ohio into the future.” He simply wants to be sure any such processes “are established in accordance with Ohio law.” Basically, he believes the job should have been put out to bid.
To that end, the State Board of Deposit has asked the Ohio Attorney General to issue a formal opinion on whether the payment method facilitated by BitPay “constitutes a ‘financial transaction device’ under Ohio law.”
Until such an opinion has been provided, the OhioCrypto.com portal is suspended.
What does this mean for states, taxpayers?
This is unlikely to have a big impact. Since the portal opened for business on November 26, 2018, “fewer than 10 businesses have chosen to pay taxes” through it.
Similarly, since other states don’t allow businesses to pay taxes with cryptocurrency at this time, they’re unlikely to be affected by the suspension of OhioCrypto.com. They’ll likely be watching the situation unfold, however.
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