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ARIZONA STATE SENATE
Fifty-Seventh Legislature, Second Regular Session
AMENDED
state agencies; payments; cryptocurrency
Purpose
Effective January 1, 2027, authorizes a state agency to enter into an agreement with a virtual currency service provider to accept virtual currency as a payment method for any amount due to the state agency or the state. Allows tax payments to be made in virtual currency if the Arizona Department of Revenue (ADOR) enters into an agreement with a virtual currency service provider to accept virtual currency as a payment method.
Background
Virtual currency is a digital representation of value, other than a representation of the U.S. dollar or a foreign currency, that functions as a unit of account, a store of value and a medium of exchange. Some virtual currencies are convertible, which means that they have an equivalent value in real currency or act as a substitute for real currency (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 bank draft, check, cashier's check, money order, cash or 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 and 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 virtual currency service provider to provide a method to accept virtual currency as a payment method of fines, civil or other penalties, rent, rates, taxes, fees, charges, revenue, financial obligations and special assessments to pay any amount due to the state agency or the state.
2. Allows a state agency that has entered into an agreement with a virtual currency service provider to accept virtual currency as a payment method for any amount due to the state agency or the state.
3. Allows ADOR to enter into an agreement with a virtual currency service provider to accept virtual currency for remittances of TPT and municipal tax.
4. Adds virtual currency to the permissible methods of remitting taxes to ADOR, if ADOR enters into an agreement with a virtual currency service provider.
5. Requires an agreement with a virtual currency service provider to:
a) govern the terms and conditions on which virtual currency may be accepted or declined as a form of payment; and
b) provide the manner in and conditions on which a virtual currency service provider must pay the state by means of virtual currency or U.S. dollars.
6. Allows a state agency to pay any transaction service fees specified in a virtual currency payment agreement or require a person that pays with virtual currency to pay the service fees associated with the virtual currency transaction.
7. Deems a person that pays with virtual currency liable for the payment and all interest and penalties until the state agency has received final and unconditional payment of the full amount due from the virtual currency service provider for the transaction.
8. Defines virtual currency as a digital representation of value that functions as a medium of exchange, a unit of account and a store of value, including Bitcoin, Ethereum, XRP, Litecoin, Bitcoin Cash and Stablecoins.
9. Excludes, from the definition of virtual currency, legal tender issued by the United States or a foreign government.
10. Defines virtual currency service provider as a person or entity with demonstrated experience converting any form of virtual currency, including Bitcoin, Ethereum, XRP, Litecoin and Bitcoin Cash, to legal tender.
11. Defines stablecoin as a payment stablecoin as defined in the federal Guiding and Establishing National Innovation for U.S. Stablecoins act of 2025 and that is issued in compliance with all applicable federal laws governing such issuance.
12. Makes technical changes.
13. Becomes effective on January 1, 2027.
Amendments Adopted by Committee of the Whole
1. Allows a state agency to enter into an agreement with a virtual currency service provider, rather than a cryptocurrency service provider.
2. Replaces the definition of cryptocurrency with a definition of virtual currency.
3. Defines stablecoin.
4. Makes conforming changes.
Senate Action
FIN 1/26/26 DP 4-3-0
Prepared by Senate Research
February 25, 2026
MG/SJ/hk