Feb 28, 2019 10:15 UTC
Feb 28, 2019 at 10:15 UTC
Does the IRS Accept Bitcoin?
Can people pay their taxes with Bitcoin? That’s the question a lot of us have in our minds. Well, the answer to this is – “NO!”
Neither can you pay your taxes in Bitcoin nor with the loose diamonds, even though, they too have value.
By law, at 31 U.S.C. 5103, you can pay your taxes using US money;
“United States coins and currency (including Federal reserve notes and circulating notes of Federal reserve banks and national banks) are legal tenders for all debts, public charges, taxes, and dues.”
It is worth noting here that law is found at Title 31, and not Title 26. This is because not all laws which affect your taxes are particular to the Tax Code.
Since IRS (Internal Revenue Service) is an arm of the federal government, it is subject to other regulations such as this one from the BFS (Bureau of Fiscal Service) which assured that IRS would no longer accept the checks for $100 million or more.
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Corresponding Provision in Tax Code
When an issue is directly associated with the IRS, then you won’t necessarily find a corresponding provision in the Tax Code.
For example, consider the issue of paying in foreign currency. On the official IRS website, it notes –
“Payments of U.S. tax must be remitted to the U.S. Internal Revenue Service (IRS) in U.S. dollars.”
But if you check the Tax Code, then you will not find any specific language required those taxes to be paid in USD, just like there’s nothing in the Code saying NO to payments of Bitcoin.
Here’s what the Code says –
“It shall be lawful for the Secretary to receive for internal revenue taxes (or in payment for internal revenue stamps) any commercially acceptable means that the Secretary deems appropriate to the extent and under the conditions provided in regulations prescribed by the Secretary.”
Future Interpretations of the Tax Code
Well, this is a fancy way of saying that the IRS will issue the Regulations and other guidance about the kinds of payment that you can use to pay your taxes.
And the IRS has done so by authorizing payment by check, credit card, money order and debit card.
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What About Other Forms of Payment?
Paying in foreign currency has already been addressed. However, it is allowed under limited circumstances.
But paying in Bitcoin has not particularly been authorized, and even if you wished to argue that the particular omission of bitcoin shouldn’t preclude using those as payment for taxes, then you would likely lose under a statutory interpretation of what’s assumed “commercially acceptable.”
With the above discussion, if you really had your heart set on paying your bitcoin, then you could investigate using a 3rd party.
Sure, just because IRS doesn’t accept cryptocurrency now as a direct payment, it doesn’t mean that will always be the case.
A bill to accept bitcoin as a form of payment for taxes was subsequently voted down by the New Hampshire legislature in 2016.
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