Assigned to FICO FOR COMMITTEE
ARIZONA STATE SENATE
Fifty-Sixth Legislature, Second Regular Session
FACT SHEET FOR S.B. 1128
state agencies; payments; cryptocurrency
Purpose
Effective January 1, 2025, authorizes a state agency to enter into an agreement with a
cryptocurrency service provider to accept cryptocurrency as a method of payment for any amount
due to the state agency or the state. Allows tax payments to be made in cryptocurrency if the
Arizona Department of Revenue (ADOR) enters into an agreement with a cryptocurrency service
provider to accept cryptocurrency as a method of payment.
Background
Cryptocurrency is a type of convertible virtual currency that can be used as payment for
goods and services, digitally traded between users and exchanged for or into real currency or digital
assets (IRS).
Transaction privilege tax (TPT) is a gross receipts tax levied for the privilege of conducting
business in Arizona and is imposed under 16 business classifications. Statute requires businesses
to pay TPT to ADOR by the 20th day of the following month after the tax is incurred. All TPT
payments must be made to ADOR by: 1) bank draft; 2) check; 3) cashier's check; 4) money order;
5) cash; 6) money order; 7) cash; or 8) electronic funds (A.R.S. §§ 42-5008; 42-5014; and
42-5018).
Individual and corporate income tax is levied on taxable income. Income tax may be paid
in installments or in one payment, as prescribed. Corporate income tax can be paid by electronic
funds transfer and individual income tax can be paid by check, cashier’s check, certified check,
money order, U.S. currency or by the application of an overpayment from a prior tax return (A.R.S.
§§ 43-1011; Version 2; 43-1111; A.A.C. R15-2C-101; and R15-10-302).
There is no anticipated fiscal impact to the state General Fund associated with this
legislation.
Provisions
1. Allows a state agency to enter into an agreement with a cryptocurrency service provider to
provide a method to accept cryptocurrency as a payment method of fines, civil penalties, other
penalties, rent, rates, taxes, fees, charges, revenue, financial obligations and special
assessments.
2. Allows a state agency that has entered into an agreement with a cryptocurrency service
provider to accept cryptocurrency as a payment method for any amount due to the state agency
or the state. FACT SHEET
S.B. 1128
Page 2
3. Requires an agreement with a cryptocurrency service provider to:
a) govern the terms and conditions on which cryptocurrency may be accepted or declined as
a form of payment; and
b) provide the manner and conditions that a cryptocurrency service provider must pay the
state in cryptocurrency or U.S. dollars pursuant to the agreement.
4. Allows ADOR to enter into an agreement to accept cryptocurrency for the remittances of TPT
and municipal tax.
5. Adds cryptocurrency to the permissible methods of remitting taxes to ADOR, if ADOR enters
into an agreement with a cryptocurrency service provider.
6. Deems a person that pays with cryptocurrency liable for the payment and all interest and
penalties until the state agency receives the final and unconditional payment of the full amount
due from the cryptocurrency service provider for the cryptocurrency transaction.
7. Allows a state agency to pay any transaction service fees specified in a cryptocurrency payment
agreement or require a person that pays with cryptocurrency to pay the service fees associated
with the cryptocurrency transaction.
8. Defines cryptocurrency as any form of digital currency in which encryption techniques are
used to regulate the generation of units of currency and verify the transfer of monies, operating
independently of a central bank, including Bitcoin, Ethereum, Litecoin and Bitcoin Cash.
9. Defines a cryptocurrency service provider as a person or entity with demonstrated experience
converting any form of cryptocurrency, including Bitcoin, Ethereum, Litecoin and Bitcoin
Cash.
10. Makes technical changes.
11. Becomes effective on January 1, 2025.
Prepared by Senate Research
January 24, 2024
MG/JC/cs