Like cash, paying with Bitcoin doesn't make anything illegal legal. But unlike a check, wire transfer, or credit-card payment, there is no intermediary like a bank that might autonomously decide to reverse a transaction.
If you steal Bitcoin and use it to pay your Colorado state taxes, you remain liable (1) to the government for your theft, and (2) to the person you stole from for "conversion" of their Bitcoin. The first is a criminal issue (government comes after you); the second is a civil one (person comes after you). But Colorado's revenue agency doesn't care; they got paid and they get to keep it.
If you make up a fake credit-card number and use it to pay your Colorado state taxes, then the bank will eventually figure out what happened and reverse the transaction. Then the Colorado Department of Revenue will come after you for unpaid taxes (as well as for other misdeeds you have committed).
Note that Colorado isn't receiving Bitcoin directly, but rather is using a digital-currency payment processor. That company might decide to reverse iffy transactions. The problem is that the company can't reverse the Bitcoin transaction. They might decide, as part of their business model, to absorb the costs of fraudulent/illegal transactions and pass the (negative) savings onto the customer through fees. But they can't reverse Bitcoin transactions, any more than someone can command cash to fly out of the recipient's pocket and back into their own.
> Like cash, paying with Bitcoin doesn't make anything illegal legal. But unlike a check, wire transfer, or credit-card payment, there is no intermediary like a bank that might autonomously decide to reverse a transaction.
Unlike cash, but like any other stolen asset, if you unknowingly receive stolen bitcoin, you could still be legally required to return those bitcoins to the original owner.
> But they can't reverse Bitcoin transactions, any more than someone can command cash to fly out of the recipient's pocket and back into their own.
If "they" is a court, they absolutely can command you to take cash out of your pocket or to reverse a transaction you received.
If you steal Bitcoin and use it to pay your Colorado state taxes, you remain liable (1) to the government for your theft, and (2) to the person you stole from for "conversion" of their Bitcoin. The first is a criminal issue (government comes after you); the second is a civil one (person comes after you). But Colorado's revenue agency doesn't care; they got paid and they get to keep it.
If you make up a fake credit-card number and use it to pay your Colorado state taxes, then the bank will eventually figure out what happened and reverse the transaction. Then the Colorado Department of Revenue will come after you for unpaid taxes (as well as for other misdeeds you have committed).
Note that Colorado isn't receiving Bitcoin directly, but rather is using a digital-currency payment processor. That company might decide to reverse iffy transactions. The problem is that the company can't reverse the Bitcoin transaction. They might decide, as part of their business model, to absorb the costs of fraudulent/illegal transactions and pass the (negative) savings onto the customer through fees. But they can't reverse Bitcoin transactions, any more than someone can command cash to fly out of the recipient's pocket and back into their own.