We can all insult the IRS as much as we want, but it doesn't change their goals. It should have been common sense that the IRS were trying something like this. Any intelligent tax cheat or privacy-centric person would know that BTC is not anonymous and that if they want to keep their identity from the authorities it will be hard. The only solutions are to take steps to anonymise your coins such as using Tails, mixing coins and creating separate wallets or to use more anonymous coins (namely Monero).
The thing is that IRS is also doing its job. And I think in USA you should really be declaring your correct income and pay the right taxes or the burden of the law will fall on you. The message is always this: Pay your correct taxes and hell will not be coming to your front door. I am glad that I live in a country which is not yet that high tech in tracking my online income.
