SALT Report 3694 – The New Jersey Division of Taxation released technical advisory memorandum 2015-1 on July 28, 2015 addressing virtual currency treatment.
For sales tax purposes, convertible virtual currency is treated as intangible property. As such, the purchase or use of the currency in a transaction is not subject to sales tax. However, New Jersey sales or use tax applies when a person transfers convertible virtual currency for taxable goods or services. Any seller and/or retailer of taxable goods or services that accepts convertible virtual currency as payment must determine the fair market value of the currency in U.S. dollars as of the date of payment and charge the purchaser sales tax on the underlying transaction. Sellers who accept convertible virtual currency as payment for taxable property or services shall: • register for sales tax purposes; • record in their books and records the value of the convertible virtual currency accepted at the time of each transaction, converted to U.S. dollars; • record in their books and records the amount of sales tax collected at the time of each transaction, converted to U.S. dollars; and • report such sales and remit any sales tax due in U.S. dollars when filing their periodic sales tax returns.