Accountant Prefers Payment in Bitcoin to Credit Cards
By Marc Dresner, Senior Editor, IIR
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.
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| Ryan Lazanis |
“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.)
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| Patrick Byrne |
Indeed, one of bitcoin’s most
outspoken corporate proponents, Overstock.com CEO Patrick Byrne—who recently had
a bitcoin ATM installed in the company’s Salt 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.
Editor’s note: Ryan Lazanis will
be a featured speaker at APEX 2015—the All Payments Expo—taking place February
23-25 in Las Vegas.
Ps. SAVE $100
on registration with promo code XU2848BLOG
ABOUT THE AUTHOR / INTERVIEWERMarc Dresner is IIR USA’s sr. editor and special communication project lead. He is the former executive editor of Research Business Report, a confidential newsletter for the market and consumer research industry. He may be reached at mdresner@iirusa.com. Follow him @mdrezz.
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