Washington gov implements sales and use tax on NFTs

The government of Washington recently added NFTs to the list of properties subject to sales and use tax, becoming the first US state to do so. Citizens are now obliged to pay the tax for owning NFTs.

Before crypto or NFT regulation, the NFT taxes have been implemented. Seeing the rising popularity of NFTs and huge NFT market volume in the US, the officials decided to officially implement taxes.

The debate of whether NFTs should be taxed or not has been ongoing for many years. Some states recognize NFTs as digital assets while some don’t, which further complicates the situation.

But now, Washington officials are taking the first step to recognize NFTs as digital assets liable for sales tax and use tax.

Sales Tax is implemented on the purchase of goods by consumers or businesses, while Use Tax is tangible personal property purchased outside of the state but used inside the state.

Since there’s still a lack of clear digital asset laws within the US law, Washington is making use of its existing laws by which it recognizes NFTs as an asset liable to pay the sales tax of 6.5%.

Additionally, the Federal government and IRS will soon introduce guidelines for federal taxation of digital assets under the Biden administration.

The NFT platforms, crypto exchanges, and other crypto-related firms will have to pay taxes. The brokers will be required to collect the physical addresses and SS numbers of sellers and buyers.

The users of the NFT platforms will be required to pay personal tax returns via information returns submitted by brokers.

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