The rumor is the IRS tends not to always focus too much on transactions and/or other things which may be under $10,000 USD, generally speaking, and I am not saying that is absolute, that might be relating mostly to debt-relating things with loans, banks, etc. But if that is an accurate number, that might also be a way to stay under the "RADAR" or whatever and not to say people are invisible as the NSA and others can spy on a lot of people and figure out a lot of what people are doing. But for the most part, if people are using dollars or other fiat currencies, pay your taxes.
But not that taxes are right. I don't know what the current laws are in different countries relating to an attempt to tax or penalize or whatever Bitcoin and other cryptocurrencies. First of all in America, many things can and should violate the 4th amendment meaning it is actually not the business of the IRS or others to know. On the airplane, I got a questionnaire asking how much Bitcoin I have. I said none. It is true that I have no Bitcoin because Bitcoin lives on the blockchain. You technically can only obtain access to Bitcoin using a 12-worded passphrase seed or a key password of random digits and numbers or something. John McAfee gave a good summary of what Bitcoin is and is not.
The IRS may seek after knowing how much money you might have. But some have argued to say that something like Bitcoin is not technically money or anything else that the IRS might be going after. But nonetheless, right or wrong, the IRS and others do try very hard to go after people for all kinds of things and many times tyrannical government are in fact wrong but that doesn't mean we should be say excessively reckless about it.
If you keep it in private wallets and not exchanges this might be true. If it is in the coffers of exchanges they may more actively track it.
Technically, even if Bitcoin is in private wallets, the addresses and transactions can still be discovered and followed on some of the websites where it shows the transaction logs.
Yep. There are ways around that if people truly wish to go that route. Though you'd need to send it through different wallets and some using wrapped bitcoin or something with a privacy layer.