Increasingly, Louisiana merchants are accepting Bitcoin, a virtual currency that is not issued by a particular country, as payment for services. But what, if any, impact does that have on state law?
For the most part, it doesn’t change much of anything.
Louisiana can treat Bitcoin, which is gaining popularity, just like any other foreign currency for tax purposes. It’s not measurably different than a pound or peso in eyes of the state government.
“I think we feel comfortable right now that you still are obligated to pay taxes [on Bitcoin],” said Tim Barfield, Secretary of the state’s Department of Revenue.
There is some concern that Bitcoin could make it easier for people and businesses to circumvent their tax bill, since Bitcoin transactions are difficult to track. Barfield’s department already spends a large chunk of its budget trying to bring delinquent taxpayers into compliance and Bitcoin could give sophisticated tax evaders another tool for hiding their profits or revenue.
“It’s the new Swiss bank account,” said Barfield of Bitcoin. As a concept though, virtual currency doesn’t present much of an regulatory issue to Louisiana.
“At the end of the day, Bitcoin is no different than other currencies,” he said.
There is only one small group of people that might face Bitcoin regulation: money exchangers and transmitters.
Those who are providing a Bitcoin conversion service — similar to the way MoneyGram operates — may soon face more regulation in Louisiana. In the future, they could be required to get a license in order to do a Bitcoin currency exchange.
“People who take money to do a wire transfer of cash to Honduras. Those are money transmitters that we typically regulate and supervise in this office,” said Sid Seymour, with the Louisiana Office of Financial Institutions.
Seymour said his department is currently discussing whether Bitcoin exchangers would fall into the traditional definition of those who transmit or exchange money. If not, Seymour may ask for a legislative fix that would allow his office to oversee people who charge to convert currency into Bitcoin.
“There are companies that act as an intermediary that receive Bitcoin and send it to someone else,” said Seymour.