Seems like the IRS frowns on other types of currencies. You must pay taxes in USD IF:

You must make all federal income tax determinations in your functional currency. The U.S. dollar is the functional currency for all taxpayers except some qualified business units (QBUs). A QBU is a separate and clearly identified unit of a trade or business that maintains separate books and records.

Even if you have a QBU, your functional currency is the dollar if any of the following apply.

  • You conduct the business in U.S. dollars.
  • The principal place of business is located in the United States.
  • You choose to or are required to use the U.S. dollar as your functional currency.
  • The business books and records are not kept in the currency of the economic environment in which a significant part of the business activities is conducted.

So that seems to be saying, if you are principally in the US, even if you conducted all business in bitcoin you would still owe taxes in dollars. BUT since bitcoin is NOT a recognized currency that could be challenged. Getting paid in bitcoin is no different than getting paid in AIR.

 

Another new development is the new prepaid Bitcoin Mastercards (http://thebitcoincard.co.uk/).  Load it up with bitcoins, spend it in Dollars. Other than the somewhat small limits (750 euro/day) its the secret to being able to live your life on bitcoin.