Pillsbury Winthrop Shaw Pittman
LLP Tax Page [11K]



April 15, 2015

New Jersey Taxation of
Convertible Virtual Currency




On March 10, 2015, the New Jersey Division of Taxation issued Technical Advisory Memorandum TAM-2015-1, explaining its policy regarding convertible virtual currency.

  • In Notice 2014-21, the IRS held that convertible virtual currency (CVC), such as Bitcoin, is treated as property for U.S. federal income tax purposes. Consequently, transactions involving CVC are treated as barter transactions. In general, each party in a barter transaction is viewed as both a buyer (of the goods or services acquired) and a seller (of the goods or services given in exchange). New Jersey conforms to the federal treatment of CVC for corporate and personal income tax purposes, including wage withholding and reporting of payments to independent contractors.

  • In New Jersey, sales tax is imposed on the buyer, but the seller is obligated to collect and remit the tax. Sellers of taxable goods or services that accept CVC in exchange for those taxable goods or services must register with the New Jersey Division of Taxation for sales tax purposes.

  • Where a customer exchanges CVC for taxable goods or services, the customer owes sales tax as if it paid in U.S. dollars. In this case, the sales tax owed is determined by the market value of the CVC exchanged, converted into U.S. dollars at the time of the exchange, and the seller of the goods or services that are taxable is required to collect and remit the sales tax on the transaction. On the other side of the barter transaction, the seller of the CVC (the customer) is not required to collect and remit sales tax on the transaction because the CVC is nontaxable intangible property under New Jersey sales and use tax law.

  • The sale of CVC itself in exchange for U.S. dollars or in exchange for another CVC does not create a sales tax obligation on the part of either the seller or the buyer.

  • Sellers accepting CVC must record in U.S. dollars at the time of each transaction the value of the CVC accepted, the value of the goods or services sold, and the amount of sales tax collected. The sales tax is based on the value of the CVC converted to U.S. dollars at the time of a taxable transaction. Sellers must record the value of the CVC accepted at the time of each transaction in U.S. dollars and the cash value of the goods or services sold. The amount of sales tax collected by the Seller must be recorded in U.S. dollars at the time of each transaction, and must be remitted in U.S. dollars. Sellers who accept CVC as payment for goods or services must also retain documentation of the amount for which they regularly sell the same or similar property to customers for U.S. dollars.

Available Material

For further information please contact Richard Nielsen (San Francisco), Michael J. Cataldo (San Francisco) or Paul T. Casas (San Francisco).


Quick Takes contain short summaries and highlights of recent tax developments often with links to underlying material and are not intended and cannot be construed as legal or tax advice.


Tax Page  |   Quick Takes  |   Tax Page Search

Pillsbury Winthrop
Shaw Pittman [1.9K]

© Pillsbury Winthrop Shaw Pittman LLP [an error occurred while processing this directive]