If memory serves me correctly, they have their own blockchain analyzer and tracer. However, something like Wasabi Wallet might make the IRS's job a bit harder and keep them a little more honest perhaps.
It's probably somewhat easy to hide the paper trail. I just hate the fact that wanting privacy is treated like a criminal offense even though it's not at all illegal. If bitcoin goes to the tens of millions I'll prob be forced to play it save and revoke my citizenship and move to a more crypto friendly nation, of which, idk. Maybe declare my millions, pay whatever tax on it, then reapply for US citizenship if I want to come back. Such a fucking hassle to merely cash out. Well, I guess the US gov will miss out on the taxes I'd pay on cashing out. Dumb fucks, their loss.