It's a catch 22 that they have on purpose.

If you have an illegal source of income and don't report it, then IRS will come after you because they'll notice the discrepancy between your spending and reported income, so they'll have probable cause to search/arrest you. This will then give evidence for other federal agencies.

And if you report you illegal income, then IRS will be happy but the other federal agencies will come after you because now they know about it and have probable cause to search/arrest you.