NEW JERSEY WANTS TO TAX BITCOIN TRANSACTIONS

[Wilikon]

In New Jersey, if you accept bitcoin as a retailer, you must collect sales tax — twice. That’s the word from the New Jersey Division of Taxation, which has issued a technical advisory memorandum spelling out the tax implications of cryptocurrency in the Garden State.

According to the state, bitcoin and other virtual currencies are treated as property, and a retail sale that’s paid for with bitcoin is treated as a barter transaction — which, the state says, actually consists of two separate sale transactions, because each party “gives something of value to the other in order to receive something of value in return,” according to the memorandum.

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.”

New Jersey’s current sales tax rate is 7 percent, with some exceptions that can make it lower, according to TaxRates.com. It’s the responsibility of sellers to keep track of documentation, including the dollar value of bitcoin at the time of the transaction, and remit any sales taxes due — in U.S. dollars — to the state.

Odd as the double-sales-tax treatment sounds, it’s in line with an IRS notice in March that said bitcoin should be treated as property for tax purposes. According to the Bitcoin Foundation, that “may make compliance with tax laws unnecessarily cumbersome and imposes untenable recording and reporting requirements on its users,” NEWSBTC reported.

While the New Jersey tax guidance deals with the bitcoin-as-property implications for retailers, it leaves unclear how less conventional uses of bitcoin, such as for international money transfers, might be affected.


http://www.pymnts.com/news/2015/new-jersey-wants-to-tax-bitcoin-transactions/#.VSbMbF3F9Nw

[RodeoX]

7% !!! To live in New Jersey 
Surely you mean that one receives 7% as a consolation. 

Without an effective lobby we are going to have to get used to this. There will be dozens of bills coming in the next two years.

[Wilikon]

7% !!! To live in New Jersey 
Surely you mean that one receives 7% as a consolation. 

Without an effective lobby we are going to have to get used to this. There will be dozens of bills coming in the next two years.

Yes. But is was also predictable. If I was a powerful lobby with lots of $$$ I would push for regulating any forms of "digital properties", including in the universe of WoW and other games, etc.

I would also make sure to push for a definition of the value of a bitcoin based on the time zone of every single transaction in the world.


 

[lophie]

So unless you are a business that openly accepts Bitcoin, How exactly do they plan to enforce this? Would the businesses just using it as a gateway (Through BitPay, Just existing 100% to cash) are supposed to pay taxes twice? for the cash income and Bitcoin?

[redsn0w]

So unless you are a business that openly accepts Bitcoin, How exactly do they plan to enforce this? Would the businesses just using it as a gateway (Through BitPay, Just existing 100% to cash) are supposed to pay taxes twice? for the cash income and Bitcoin?

No I don't think they will tax twice, because the merchant will receive FIAT money (dollars) through a bank transfer and not bitcoin so they cannot tax him because he "never" touched bitcoin. Maybe I am wrong, but I think this is a valid supposition.

[TheButterZone]

7% !!! To live in New Jersey  
Surely you mean that one receives 7% as a consolation.  

Without an effective lobby we are going to have to get used to this. There will be dozens of bills coming in the next two years.

Even 21 million BTC wouldn't be effective enough of a lobby. Tyrants gonna tyrant.

[tarzan2]

How do they plan to implement all these regulations I want to know.. Anyone can find a way to purchase bitcoins underneath government radar simply by bitcoin's very nature.. these sorts of things are great for the moneysuckers..er politicians.. to propose but in practice i'd like to see them try it on a determined and smart bitcoiner

[BADecker]

The 9th Amendment:

The enumeration in the Constitution, of certain rights, shall not be construed to deny or disparage others retained by the people.

There is no place in law where people's rights have or can be denied to them. Virtually all law can be set aside by any individual person who decides he does not want to follow the particular law. Some cases may be easy; others may be difficult.

The basics of how this works is this.

1. You are your own property. Your labor is your property because it was created by you. The things that you use your labor for are your own property.

2. If anybody messes with you, he is messing with your property. You can sue him in court, man to man, to have your property returned to you, or at least to get compensation for your property and your time. This happens all the time. The method for doing this often includes letter writing between the two people, before the thing goes to court.

3. A government official is a man or woman. If he uses his governmental office to mess with your property, you can sue him as a man/woman, just like you would sue anyone else who messed with your property.

People are so used to the idea of getting an attorney, and fighting against all kinds of fancy legal stuff with fancy legal stuff of their own, that they forget the simplicity involved with a man (or woman) messing with your property.

No government person can take your property. If there is an emergency need that allows him to take your property under emergency, he must compensate you. The compensation cannot be general. It must be clear, direct compensation, value for value, just as though you sold your property to him.

People fight the wrong thing when they fight government. Government never acts on its own. Government is paperwork; it can't act on its own. Paperwork can't jump up and do anything. It is always a man or woman that does something to you. Sue the man or woman, not the government.

But stay in honor. Write letters to him/her first. Document what you do. This gives him/her the opportunity to make it right with you before you waste the court's time. It also documents that you have attempted to deal with him/her as a record to be used in court when the time comes.

[Snail2]

Double sales tax sounds a bit rough