If the goal of the IRS is to collect as much tax money as possible, they would, in such a case, have all the incentives to protect your illegal business from being busted.
The IRS couldn't manage to keep the detailed tax records of every american out of propublica's hands... Does anyone think they can keep them out of other agencies hands?
I would imagine that in cases where you're earning a significant enough amount of money, the issue isn't whether the government knows you're up to no good, the issue is whether they have admissable evidence that you're up to no good.
My contention is that the mere knowledge that you are reporting income is actionable information to the government and the IRS has no way to guarantee it does not get out.