Marc Dresner for allpaymentsexpoblog.iirusa.com writes: Until fairly recently, the only people who had to be concerned with the potential tax implications of using bitcoin were those buying, selling and “mining” the cryptocurrency—a niche population of highly tech savvy individuals.
But increasingly, companies are accepting bitcoin as payment and even paying their employees in it, which has opened an entirely new stream of prospective clients for accountants who can help them negotiate the persistent tax uncertainty surrounding cryptocurrencies.
“People and companies are having a difficult time navigating the tax environment since there is still so little guidance,” said Ryan Lazanis, CPA, CA and principal of Montreal-based Xen Accounting.
“Digital currency is a completely new concept. A lot of these new concepts are not applicable to existing tax law.”
“The regulatory environment is definitely tricky,” Lazanis added. “Digital currency, on the whole, is a completely new concept. And a lot of these new concepts are not applicable to existing tax law.”
In 2014, a high-profile string of major companies—Microsoft, Dell, Expedia, PayPal and even Time, Inc., among others—announced they would accept payment from customers in bitcoin.
And last month, Overstock.com, which had already been taking payment in bitcoin for a year, announced it would offer employees the option of being paid in the cryptocurrency.
To be precise, none of these companies accepts bitcoin payment directly; they accept it through intermediaries like Coinbase and BitPay, who convert it to cash for them—a pretty clear indication that there’s still not much faith in the currency, whose value plummeted more than 54% in 2014.
Bitcoin-related inquiries have tapered in tandem with the currency’s drop in value.
Moreover, Lazanis says the volume of bitcoin-related inquiries his firm receives has tapered in tandem with the currency’s decline in value.
“[Bitcoin queries] come in waves. Back when Bitcoin prices were spiking, we were getting a ton of inquiries,” Lazanis told On Payments in a podcast interview.
Instability will doubtless continue to dog cryptocurrency adoption among businesses, but it may be that smaller companies realize the benefits and move the needle first.
Lazanis says that his firm enthusiastically accepts bitcoin because of its advantages over credit cards.
“We prefer to be paid in bitcoin over credit cards.”
“We prefer to be paid in bitcoin over credit cards,” Lazanis said.
“For most small businesses there are a few percentage points and fees attached to credit card payments that actually make a big impact at the end of the year,” he explained, “and some credit card gateways take up to seven business days to put that money in your bank.”
“With bitcoin there are zero fees and you receive that money immediately,” he added.
Lazanis, whose clients tend toward techier types, reports that Xen Accounting continues to receive inquiries from both tech-forward and more traditional companies that want to open themselves up to new markets.
These markets may need a nudge…
In some economies in the less developed world with fewer entrenched interests and infrastructure impediments, digital currency markets are rapidly growing.
But in the First World, these markets may need a nudge.
(Editor’s note: For more on the impact of digital currency in emerging markets, check out episode four of On Payments.)
Indeed, one of bitcoin’s most outspoken corporate proponents, Overstock.com CEO Patrick Byrne—who recently had a bitcoin ATM installed in the company’sSalt Lake City headquarters—conceded as much when the company announced it would offer employees the option to be paid in bitcoin.
“Moving cryptocurrencies out of the realm of geeks and into the realm of the rest of us requires making changes.”
– Patrick Byrne, CEO, Overstock.com
“Moving cryptocurrencies out of the realm of geeks and into the realm of the rest of us requires making changes at all levels of the financial ecosystem,” Byrne said in a press release.
Come April, those employees who take Byrne up on his offer will likely need some tax advice from people like Ryan Lazanis…
In this podcast for On Payments—the All Payments Expo (APEX) interview series—Ryan Lazanis discusses the potential tax implications around using cryptocurrencies and offers tips for individuals and companies interested in expanding into digital currency payments.
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Marc Dresner is IIR USA’s sr. editor and special communication project lead. visit http://allpaymentsexpoblog.iirusa.com/
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