The state of New York has declared Bitcoin will be treated as intangible property according to a technical memorandum issued by the New York Department of Taxation and Finance. This designation will allow sales conducted in Bitcoin or other virtual currencies to not attract sales tax. The department states,
The use of convertible virtual currency by a customer to pay for goods or services delivered in New York State is treated as a barter transaction. For sales tax purposes, convertible virtual currency is intangible property. Since the purchase or use of intangible property is not subject to sales tax, any convertible virtual currency received by a party to a barter transaction is not subject to sales tax.”
The ruling marks a huge step towards a structured regulation of virtual currency, which is in turn to expected to allow for further adoption of it as both a currency and an asset.
Responses to the announcement have been mixed. Co-founder of Bitcoin Association, David Mondrus, said to CoinTelegraph,
First, the law only applies to the NY resident in the transaction, since the Supreme Court ruled in 1992 that only companies with a presence in a state are liable for the collection of sales tax. Second, use tax compliance is notoriously low for internet purchases. And third since barter transactions are rare in the non-Bitcoin world, and therefore complex to most consumers and merchants, almost ensures that compliance with this ruling will be low.”
On the other hand, supporters are relieved by the ruling and believe the outcome had potential to be less favorable. Marco Santori, businesses attorney and commercial litigator, via Twitter stated the ruling was great news.
Consumer’s Research Executive Director Joseph Colangelo agrees with Santori- that the ruling is the first affirmative statement to this effect. He further asserts,
…it’s a defensible position and leaves a lot of opportunity open to Bitcoin.”
The ruling marks an exciting moment as policymakers begin to shape the way virtual currency will be regulated.
Read more here- “New York Declares Bitcoin “Intangible Property’,” (John Weru Maina, CryptoCoinsNews)
Olivia is a graduate of Villanova University where she studied Economics and History, minoring in Gender and Women's Studies. She also has experience working with federal legislatures on health care policy, women's issues, and Internet safety.