...Bitcoin transactions that avoid paying applicable taxes are in fact illegal...
All transactions that avoid paying applicable taxes are illegal. What's that got to do with Bitcoin?
To be more accurate, all transactions MAY require you to report the income/loss from that transaction, annually. Technically, if your baseball card increases in value from $1 to $1,000 and you realize that value in a sale, then that's reportable income. Bitcoin is no different. (USA)