[2015-04-09] Pymnts.com - New Jersey Wants To Tax Bitcoin Transactions Twice

bryant.coleman

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Quote from: pawel7777 on April 09, 2015, 01:59:12 PM

I'm pretty sure you're liable for tax also in relation to barter transactions, although not sure whether CGT is applicable in such case.

What I'm interested what happens when you (private customer, not business) sell something to the pawn shop in the state of New Jersey. Are you expected to declare it and pay CGT even for a one-time small transactions, or is there a threshold? Is the shop owner obliged to check your ID and take your details (and pass them on to IRS)?

This is a very dumb idea from the New Jersey lawmakers. Barter transactions are very hard to trace, let alone tax them. If I barter one apple for two oranges, how I am going to pay my taxes? Can I pay an apple slice as tax?

odolvlobo

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This treatment applies to all barter transactions (in New Jersey) and is not specific to Bitcoin.

Since bitcoin is considered a property, a transaction using Bitcoin is considered a barter transaction and both parties must pay sales tax.

Quote from: http://www.state.nj.us/treasury/taxation/pdf/pubs/tams/tam-2015-1.pdf

In a barter transaction, as in any sale, sales or use tax is due from each party based on the value of the property or services given in trade if what is received in exchange is subject to sales tax.

When a customer uses convertible virtual currency to pay for property the sale is treated as a barter transaction. As a result, if a seller uses convertible virtual currency as consideration for goods or services, sales tax is due based on the amount allowed in exchange for the virtual currency. If the customer that provides convertible virtual currency in the trade receives property that is subject to tax, the customer owes tax based on the market value of the virtual currency at the time of the transaction, converted to U.S. dollars.

IDKwhatimdoing

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What?!? These guys are insane, lool Grin

This doesn't make any sense whatsoever. Why demand the consumer to spend more for "bitcoin taxing"? How is bitcoin taxing even a thing? Poor attempt to stop people accepting BTC Roll Eyes

Unkle

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I think regulation is good for bitcoin overall but when it's like this (if true) then it can severely limit or even cripple bitcoin adoption. Hopefully it gets sorted out or this practice doesn't become widespread.

pawel7777

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Quote from: bryant.coleman on April 09, 2015, 12:34:37 PM

Quote from: pawel7777 on April 09, 2015, 12:25:10 PM

I don't think it changes anything from BTC-accepting retailer point of view. It's just they treat customers who pay with bitcoins as 'sellers'.
I don't know much about US tax rules, but don't think customers who use bitcoins from time to time will be liable to pay such tax.

As far as I know, taxes on Bitcoin will be applicable only of they are converted to fiat, and at a profit. In such cases, a capital gains tax has to be paid (long term or short term depending upon the duration).

I'm pretty sure you're liable for tax also in relation to barter transactions, although not sure whether CGT is applicable in such case.

What I'm interested what happens when you (private customer, not business) sell something to the pawn shop in the state of New Jersey. Are you expected to declare it and pay CGT even for a one-time small transactions, or is there a threshold? Is the shop owner obliged to check your ID and take your details (and pass them on to IRS)?

bryant.coleman

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Quote from: pawel7777 on April 09, 2015, 12:25:10 PM

I don't think it changes anything from BTC-accepting retailer point of view. It's just they treat customers who pay with bitcoins as 'sellers'.
I don't know much about US tax rules, but don't think customers who use bitcoins from time to time will be liable to pay such tax.

As far as I know, taxes on Bitcoin will be applicable only of they are converted to fiat, and at a profit. In such cases, a capital gains tax has to be paid (long term or short term depending upon the duration).

pawel7777

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Quote

The memorandum continues: “As a result, if a seller uses convertible virtual currency as consideration for goods or services, sales tax is due based on the amount allowed in exchange for the virtual currency. If the customer that provides convertible virtual currency in the trade receives property that is subject to tax, the customer owes tax based on the market value of the virtual currency at the time of the transaction, converted to U.S. dollars.”
...

I don't think it changes anything from BTC-accepting retailer point of view. It's just they treat customers who pay with bitcoins as 'sellers'.
I don't know much about US tax rules, but don't think customers who use bitcoins from time to time will be liable to pay such tax.

It's basically like selling something to the pawn shop.

The question is whether retailers will be expected to collect personal info from bitcoin-paying clients etc.

Black Arrow

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"In New Jersey, if you accept bitcoin as a retailer, you must collect sales tax — twice."
http://www.pymnts.com/news/2015/new-jersey-wants-to-tax-bitcoin-transactions/#.VSZ0OZPzfYk

This is very confusing, and I'm not sure I understand it correctly. Neither the article nor the technical advisory has any examples to clarify how it might work. But if I understand it correctly, it requires the retailer to collect sales tax from the purchaser for the dollar value of goods sold, which is standard. But it would also require the customer to collect sales tax from the retailer, because in effect he sold bitcoins to the retailer in exchange for the products he purchased.

Topic: [2015-04-09] Pymnts.com - New Jersey Wants To Tax Bitcoin Transactions Twice (Read 709 times)