The New Jersey Division of Taxation has issued guidance concerning the treatment of virtual currency, such as bitcoin and other cryptocurrencies for purposes of corporation business, gross income (personal), and sales and use taxes.
When a customer uses convertible virtual currency to pay for property, the sale is treated as a barter transaction. As a result, if a seller uses convertible virtual currency as consideration for goods or services, sales tax is due based on the amount allowed in exchange for the virtual currency. If the customer that provides convertible virtual currency in the trade receives property that is subject to tax, the customer owes tax based on the market value of the virtual currency at the time of the transaction, converted to U.S. dollars.
For purposes of corporation business tax and gross income tax, a taxpayer will realize gain or loss on the sale or exchange of convertible virtual currency. The fair market value of convertible virtual currency paid as wages is subject to New Jersey gross income tax withholding. The fair market value of convertible virtual currency received for services performed by an independent contractor must be measured in U.S. dollars on the date the contractor receives it. Finally, a payment made using convertible virtual currency is subject to information reporting requirements to the same extent as any other payment made in property. Technical Advisory Memorandum TAM-2015-1, New Jersey Division of Taxation, March 10, 2015