i would say bitcoin trading belongs in the category of DIGEX then, a digital currency exchange.
Personally, I find tax returns are bad enough without including multiple currencies! :-)
(I'm a BitCoin noob, tell me if I'm wrong.) :)
Seriously. Is there any simple guidance on how to figure your income if paid in BTC?
The greater problem is how the employer manages to get a hold of larger amounts of BTC needed.
If I were the employer, I'd be wringing my hands; for all I know they could've gotten a small fortune in BTC when they were still cheap to generate / purchase, and since then the value of BTC has sixtupled (or more). So, pay their employees without having to spend real money. I'm probably not understanding BTC though.
They are using external service for that AFAIK. The company itself does not manage the bitcoin purchases.
You probably get the same thing you do with the cash economy where people just make up the lowest figure that sounds vaguely plausible.
Also, substantially failing to report your income effectively means that your tax year never closes, which means that the IRS has effectively until the end of time to pursue you for unreported income. (Whereas normally there is a 3-6 year statute of limitations for the IRS to audit you.)
With bitcoin it is like having your money spread across thousands of anonymous bank accounts which are opened by secret handshake.
This is a bad understanding of cryptography. Bitcoin does not provide security in the cryptographic sense, any more than Skype or Hushmail. It uses secure cryptographic primitives but can be successfully attacked (double-spent) in polynomial time.
Does that kind of sentence promote better understanding how cryptography or bitcoin works for the average Joe?