The Blockchain which is best known for the “guts” of how bitcoin transactions are verified, recorded and transacted, has uses beyond bitcoin. This decentralized system can be used to verify and process many types of transactions where two or more parties want verification of authenticity and to get information or transfer information or value. IBM and others have been exploring this. The Federal Reserve and others held a conference on the topic in June.
On September 26, the bipartisan Blockchain Caucus was launched led by Congressmen Mick Mulvaney (R-SC) and Jared Polis (D-CO). Per their 9/27 press release:
Blockchain technology has the potential to revolutionize the financial services industry, the U.S. economy and the delivery of government services, and I am proud to be involved with this initiative. Blockchain is a vast public ledger that records every transaction of the digital currency Bitcoin and stores it in a global network so it can’t be interfered with. It’s constantly growing as more blocks with new recordings are added to it.
Mick Mulvaney
The press release doesn’t mention tax, but tax is very relevant to this topic for a few reasons, including:
- There are tax rules and issues in transacting business via a blockchain including sourcing and identifying the nature of the transactions.
- Tax administration and compliance can be aided by this new technology.
- Security is crucial so people are willing to do more types of transactions via this new technology.
Let’s see what the caucus takes on in the next year.
What do you think?
For more on virtual currency and blockchain technology, visit my website on the topics.
Annette Nellen, CPA, Esq., is a professor in and director of San Jose State University’s graduate tax program (MST), teaching courses in tax research, accounting methods, property transactions, state taxation, employment tax, ethics, tax policy, tax reform, and high technology tax issues.
Annette is the immediate past chair of the AICPA Individual Taxation Technical Resource Panel and a current member of the Executive Committee of the Tax Section of the California Bar. Annette is a regular contributor to the AICPA Tax Insider and Corporate Taxation Insider e-newsletters. She is the author of BNA Portfolio #533, Amortization of Intangibles.
Annette has testified before the House Ways & Means Committee, Senate Finance Committee, California Assembly Revenue & Taxation Committee, and tax reform commissions and committees on various aspects of federal and state tax reform.
Prior to joining SJSU, Annette was with Ernst & Young and the IRS.
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