Riot hasn’t released any information on the detection algorithms used by the IFS. Thus, the following is my personal opinion and observation:
The system can detect sarcasm, but it knows that sarcasm is “lesser” than other forms of toxicity (such as explicitly berating a teammate), and treats it as such. Thus, if someone’s being sarcastic, they likely won’t be punished off of one game of that behavior. Also, the system isn’t perfect at detecting sarcasm, and it certainly could miss certain things. But constantly spamming sarcastic comments appears to me to be detectable.
That being said, you shouldn’t base your report off of “if it’s valid” or not. You should report any behavior that you, as a Summoner, do not wish to see continue on the Rift. Riot bases the IFS and other punishment standards on the community’s desire to see certain behaviors punished. One of the primary ways they know what you consider punishable is to monitor behaviors that are reported - which is why it’s helpful to put a comment in the report box so they know why you reported that behavior if they review your report. You cannot and will not be punished for submitting reports that do not result in a punishment - feel free to report every behavior you do not want to see.
One last thing - you shouldn’t be ashamed/worried/scared to use the mute button. If it becomes clear like in this case that someone is only going to use chat to flame you or to convey a negative attitude on the team, you should mute them. Riot’s statistics show that players who mute toxic players are more likely to win the game than players who don’t (hence the tips in the client that suggest the same). If they’re flaming you, it’s probably not likely they magically stop and return to only useful game information in chat - so just mute them. The advantage conferred by possibly seeing them saying something useful is much less than the disadvantage you being unhappy/“tilted” because of their toxicity - and you may not even know that you’re getting “tilted”. It’s better to mute and avoid any kind of potential unseen “tilt” than it is to just sit there and take it until you know you’re tilted, because then it’s too late.
Best of luck on the rift!