This is after all an electronic "smart currency"...it seems to me that there will be electronic solutions to this problem which will make the necessary record keeping required for most Bitcoin users rather invisible.
Oh yes. The same Silicon Valley companies who were overjoyed to sell their customers' privacy down the river will be rushing to solve this problem too.
They will. They might not care about bitcoin, but they are dead serious about being big players in cryptocurrencies and the IRS regulation applies to all cryptos.