This seems impossible to enforce for the consumer. If I buy $700 worth of stuff on Overstock in BTC that I paid $500 for how is the IRS going to track this or even know? Am I just on the honor system to report it? Good luck with that...
Yes.
Income taxes are "voluntary", Harry Reid said so.
I believe this is a monumental opportunity for bitcoin.
Watch the IRS flail about as it attempts to tax everything that moves including 1's and 0's.
And fail stupendously.
Since the tax is due in USD and not bitcoin, I expect this will quickly hasten the demise of the dollar and send BTC exponentially upward.
This will also result in the US government hyper inflating away its debts, and the IRS turning into a septic cleaning service to clear out all their inked TP.
Grab the popcorn. This should be a good show. David vs. Goliath like.