After all, this is the money used to fund your school system, hospitals, pensions, police, fire, and all other government services. It sounds awfully risky to rely on something with such volatile price to provide for needs that are so important to the community.
Accepting payment doesn't necessitate hodling. Maybe they could hook up with a licensed payment processor like Coinbase.
Eventually, BTC might be held in government reserves just like other hedging assets -- gold, etc. It's rational to be skeptical now, but don't ignore the trends. Gold also rallied over 600% in a decade (early 2000s). It's volatile but is still considered a value hedge.
but is this another way the government is trying to take all our bitcoin?
Yes. It's also a privacy hole. Payments provably linked to a taxpayer ID can have implications for de-anonymizing your wallets.