Your bank, employer, cash app and brokerage all report to the IRS so unless you are a drug dealer or similar, yeah for the most part they already know it.
Heres the best bit, people working under the table are going to be making less than 100k generally so it doesn't really matter, anyone making real money will be making big enough waves in the financial system to be detected, small movements of cash doesn't matter at this scale. The highly taxed routes (capital gains) are also already highly policed for tax purposes so no transition is needed there.
IRS might not know about those activities, but that income is supposed to be reported.
Illegal activities. Income from illegal activities, such as money from dealing illegal drugs, must be included in your income on Schedule 1 (Form 1040), line 8z, or on Schedule C (Form 1040) if from your self-employment activity.
My bank doesn't know whether a deposit came from a long- or short-term capital gain. (You may think that you've covered that with "brokerage" but there are lots of property types where there's no third party that knows the purchase date.) Said deposit may even be tax-irrelevant.
Banks don't report every transaction and even if they did it may not be "income". E.g. moving money from one account to another is a transaction but no income was earned and it is not taxable.
How does this meaningfully affect the thesis of the comment you're responding to? What is the point of nitpicking something like this? I conjecture there isn't a point beyond "I found someone wrong in a comment you spent less than 5 minutes on even though the core thesis is still correct."
