U.S. telecom giant AT&T Inc. is allowing subscribers to pay their bills with bitcoin or bitcoin cash.
The May 23 announcement marks the first time a U.S. carrier will accept virtual currency payments, according to a news release. The company is enabling the service through a partnership with BitPay, a major virtual currency payments company.
“We have customers who use cryptocurrency, and we are happy we can offer them a way to pay their bills with the method they prefer,” Kevin McDorman, AT&T’s vice president for finance business operations, said in the release.
The news from one of the largest U.S. telecommunications providers marks another milestone for the mainstreaming of crypto payments, but could come with potential tax consequences for any of its 15.7 million broadband subscribers and 60. 6 million wireless customers who opt to pay bills using bitcoin.
“It’s always nice to see merchants experiment with cryptocurrency payments. If people want to pay with Bitcoin they should be able to,” said Neeraj Agrawal, communications director for Coin Center, a non-profit think tank focused on cryptocurrency issues.
“That being said, we hope anyone who takes advantage of this option is cognizant of that fact that under currency IRS guidance this use of cryptocurrency for a day-to-day payment would trigger a capital gains event,” Agrawal said.
Selling virtual currency for dollars or other fiat currency is relatively straightforward, said James Foust, Coin Center’s senior research fellow, specializing in taxation.
“But for something other than dollars, it’s the fair market value of the thing you got for the crypto"—in AT&T’s case, a telecom bill payment, Foust said.
Consumers would have to engage in a complicated accounting of their cost basis and possible gain or loss for each bitcoin used. That makes using crypto payments for cellular bills or other services about as clunky as trying to pay with collectible mugs, Foust said.
The virtual currency industry is seeking clarity from Congress on the tax treatment of virtual currency payments.
The bipartisan Token Taxonomy Act (H.R. 2144) includes provisions to offer a $600 de minimis safe harbor for crypto-related capital gains. The bill, introduced in the House Financial Services Committee, hasn’t yet gained much traction on the Hill.