Arizona Proposal Would Let Citizens Use Bitcoin To Pay Taxes

The Arizona state legislature is exploring a new—and possibly more complicated—way for its citizens to pay taxes: Bitcoin.

A new bill that would allow Arizona citizens to pay their state taxes in Bitcoin or potentially other cryptocurrencies has already passed the Arizona Senate and is currently up for debate within the state's House of Representatives. 

How would this work? According to the legislation, citizens would pay taxes using "a payment gateway, such as Bitcoin or other cryptocurrency, using electronic peer-to-peer systems."

The state government would then convert the cryptocurrency payment into U.S. dollars at the current exchange rate within 24 hours of receiving the payment. The taxpayer's account would then be credited with the converted dollar amount. 

For those excited about this development, it won't be available for this year's tax season. Arizona could start accepting Bitcoin around the year 2020, however.

"It's one of a litany of bills that we're running that is sending a signal to everyone in the United States, and possibly throughout the world, that Arizona is going to be the place to be for blockchain and digital currency technology in the future," said Arizona State Rep. Jeff Weninger to Fox News.

Cryptocurrencies are often susceptible to sudden price swings, which could potentially leave citizens in a tight spot if exchange rates suddenly fell after they filed. 

The Internal Revenue Service is also looking into Bitcoin, but the agency is more concerned with citizens using cryptocurrency to avoid paying taxes,