What is a local currency?

A local currency is money that is designated to be used within a given area and is not backed by a national government.  

What are the benefits of a local currency?

They tend to circulate more rapidly than national currencies resulting in greater overall local economic activity.  Since local currencies are only accepted in a given geographic location, they encourage the purchase of products and services local to that area.  Local currencies are usually not accepted by big box retailers and other corporations, this encourages people to support small businesses in their community.

Do I have to pay taxes when I use local currency?

Yes!  Well, you are supposed to at least.  Most people are not aware that you have to pay taxes if you barter services or products.  The same applies to local currency.  The IRS says you have to record your income based on the fair market value of the goods or services you provide or sell.  This means that if you buy a product with a local currency, whoever accepts the local currency has to pay sales tax on the fair market value of the sale.  Another example is if you are a self employed contractor and accept a local currency as payment for your services, you would have to pay income tax and payroll taxes.

BNotes

I live near Baltimore and have recently started accepting BNotes in exhcange for my services.  I am excited about the benefits of local currency and hope the idea catches on in other areas around the country.