Colorado begins accepting tax payments in crypto
Written by Benjamin Freed
The Colorado Department of Revenue this month began accepting state taxes and fees submitted in cryptocurrencies, making good on a statement by Governor Jared Polis earlier this year that the state would welcome alternative forms of money.
Polis, who had teased the change earlier this year, made the formal announcement Monday during a speech at Denver Startup Week, a technology conference in the state capital. In February, Polis said allowing people to make payments to the government using digital tokens would be a “very affordable and consumer-friendly way to embrace crypto.”
“We said we would deliver by the end of the summer, and we have,” Polis said Monday, the Denver Post reported.
The possibility of Colorado state government accepting cryptocurrencies has been on the table since at least 2019, when Denver lawmakers passed legislation authorizing the state to accept digital money. Polis himself first floated the idea publicly in May 2021. The Democratic governor, who made hundreds of millions of dollars as a tech investor before entering politics in 2008, has also accepted cryptocurrency donations for his re-election campaign this year.
Dan Carr, a spokesperson for the Colorado Department of Revenue told StateScoop in an email that the agency will take the payments using PayPay’s cryptocurrency platform. Payments are limited to Bitcoin, Bitcoin Cash, Ethereum and Litecoin.
Bitcoin and Ethereum have both lost 60% of their values since the start of the year, leading to a broader downturn in a global cryptocurrency market that has also been plagued by widespread fraud. Many big-city mayors who once touted fintech as economic jet engines — like New York’s Eric Adams, who used his first three paychecks to buy Bitcoin and Ethereum — have fallen silent since the downturn.
The state of Colorado is not looking for crypto tax payments as an investment vehicle, Polis has said. Carr said all payments will be effective on the date initiated on PayPal’s platform and that funds will be transferred to government coffers – in US dollars – within five business days. PayPal also collects service fees equal to $1 plus 1.83% of the payment amount for each transaction.
Even with the uncertainty in the cryptocurrency market, Colorado is unlikely to be the last state to accept it as a form of payment. In neighboring Utah, Gov. Spencer Cox signed legislation in March that gave the state’s finance department until Jan. 1 to select a cryptocurrency payment provider that can collect tax payments.
Colorado officials don’t expect to be suddenly flooded with bitcoins.
“We’re not expecting much initially,” Carr said. “We just want to give taxpayers as many different options as possible.”
