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Bitcoin in the Bluegrass State

  • Jul 2, 2014 | Gail Cole

 Kentucky takes a stance on bitcoin.

The Kentucky Department of Revenue follows the Internal Revenue Service’s guidelines with respect to bitcoin and other virtual currency. In short, bitcoin is property, not currency.

That said, Kentucky Department of Revenue reminds:

“Any business that accepts Bitcoins as a form of payment must convert the Bitcoin into U.S. dollars, and charge 6 percent Kentucky sales and use tax on any taxable transaction for which Bitcoin represents the financial instrument of consideration.”

Since the value of bitcoin is fluid, businesses must maintain accurate documentation “to verify the value of Bitcoin at the time of the transaction.”

More and more state departments of revenue are taking a stance on virtual currency. For example, in California, you can’t pay sales tax with bitcoin.

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Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.