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New York Department of Taxation and Finance Issues Tax Guidance on Virtual Currency Transactions

On December 5, the New York State Department of Taxation and Finance (DTF) issued the memorandum “Tax Department Policy on Transactions Using Convertible Virtual Currency.” The memorandum clarified that under New York law, convertible virtual currency (such as bitcoin) is considered “intangible property,” which is not subject to sales tax. Therefore, the purchase or sale of convertible virtual currency for fiat cash (such as US dollars) is not subject to sales tax. Because convertible virtual currency is property, an exchange of convertible virtual currency for goods and services is treated as a barter transaction. The transfer of the convertible virtual currency in the barter transaction is not subject to sales tax; however, the transfer of tangible goods or certain services in the barter transaction is subject to sales tax. Accordingly, a seller that accepts convertible virtual currency for goods and services must (a) register for sales tax purposes, (b) record the value of the convertible virtual currency in US dollars, (c) record any sales tax in US dollars and (d) report such sales and remit such sales tax when filing its sales tax returns. For income tax purposes, the DTF clarified that New York state tax law adheres to IRS guidance defining virtual currency as property. 

Click here to read the tax memorandum.

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Michael Rosensaft, white collar criminal litigator, Katten, New York Law Firm
Partner

Michael M. Rosensaft focuses his litigation practice on representing individuals and businesses in white collar criminal matters, regulatory enforcement matters, corporate internal investigations, insurance and health care fraud and complex civil litigation.

Prior to joining Katten, he served as an Assistant US Attorney for the Southern District of New York. In that capacity, Michael oversaw the investigation and prosecution of numerous criminal cases involving terrorism, international money laundering, export violations, bribery of foreign...

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Claudia Callaway, Litigation Lawyer, Katten Muchin
Partner

Claudia Callaway is chair of Katten’s Consumer Finance Litigation practice and co-chair of the Class Action and Multidistrict Litigation practice. She focuses her practice on the defense of state and federal class actions regarding consumer protection and consumer finance laws and representation of clients before the Consumer Financial Protection Board (CFPB), the Federal Trade Commission (FTC) and state banking agencies.

Claudia represents consumer lenders, third-party debt collectors and other consumer  financial services clients in class action suits and...

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Robert Loewy, Tax Legal Specialist, Katten Muchin Law firm
Special Counsel

Robert Loewy concentrates his practice in tax planning and litigation.

Robert advises domestic and foreign clients on a broad range of US and international tax issues. His practice is both transactional and advisory, focusing on the taxation of financial instruments and products, hedge funds and private clients. He also has extensive experience in advising clients as to the tax consequences of domestic and cross-border mergers, acquisitions and restructurings.

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