This is probably misleading as most people present it. The IRS does require you to report illegal earnings. But the justice department can also use that against you[0].

There’s quite a bit more case law on the matter, but tl;dr is that it’s a very fluid and ill-defined area of law. Personally I expect tax returns to be used as evidence more in the future, rather than less.

0: https://scholarlycommons.law.wlu.edu/cgi/viewcontent.cgi?art...