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For a few thousand bucks, they're not going to make an example of you. It's not worth it to them. If you're cashing in 6 figures to buy luxury cars, they might, I agree. You go after the big fish, not the small fries.

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It’s actually the other way around surprisingly. The big fish tend to have resources to fight the IRS in court; which becomes expensive for the IRS. Hence the IRS goes after the not so rich since they rarely put up a fight.

e.g. https://www.propublica.org/article/irs-sorry-but-its-just-ea...

That article describes lower income people taking an earned income tax credit. That sort of thing sounds very simple to find and is low hanging fruit. Most of it is probably a simple mismatch.

Your casual bitcoin spender is not going to be like that at all. Their under reported transactions will be difficult to even find. If you do find them, their true cost basis will be difficult to determine.

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