They'll have to start with businesses that accept BTC first. Before that the only way they can do anything with the rest of us is to monitor whats coming in and out of the exchanges. Assume they will. if you make lots of money, then plan to pay the taxes. If you make only a little bit to none, I doubt they will even be interested.
Hm, I see how a business would declare its Bitcoin related revenues, especially if there was conversion between local currencies. Same idea with the exchanges.
I am more picturing a world where digital currencies become the norm and most transactions done are performed using this manner, i.e. no need to convert anything to a local currency. How would a tax agency audit these transactions to ensure that the right tax has been declared / paid on it?
For the small fish, which is the vast majority of Bitcoin wallets, I imagine it is currently negligible regarding income. But I still don't see how it will be controlled when the Bitcoin economy scales upwards. Forgive the possible ignorance on my part of a crucial piece of the puzzle.