You are correct but how can the government tax you on something they know nothing about?

At least here in the U.S. we are taxed on what we report. No report = no tax .

As far as getting paid:
-One could trade peer to peer. localbitcoins.com is one that comes to mind(no tax)
-Use a "crypto payment card" bitpay ,Uquid is another.
If you do a little digging you can find a few different ways besides using an exchange.