If you have a stack of cash in a drawer, you are supposed to tell the IRS about it. It does not matter if it's in dollars, yen, Swiss francs, or pounds sterling. The fact that a lot of people don't doesn't make it legal, just unlikely to be enforced unless you give the IRS a reason to hate you. If, on the other hand, you have a garage with millions of dollars of un-reported cash in it you become an IRS priority. This is no different, under present law, from someone holding millions of dollars in bitcoins across several wallets.
The IRS could also treat bitcoins as an asset, which would classify bitcoin transactions as barter and make holdings subject to capital gains (and losses) in dollar terms. All said, it would not need new legislation to deal with this.