The IRS's most-embarrassing moments.

• Author: Schnepper, Jeff A.
• Position: Economic Observer - Internal Revenue Service

EVEN A STOPPED CLOCK is right twice a day! Sometimes, even the Internal Revenue Service gets it right, and you get it wrong. I've always said that only those with tombstones over their heads don't make mistakes, but it's sure embarrassing when the IRS points out where you blew it. In those situations, I like to remind the agency's auditors that nobody's perfect, and that the IRS, too, has had its moments. For example:

If you're sitting in an audit and fail to produce 100% of your receipts and requested documentation, wipe the smirk off your auditor's face by reminding your government representative that on Apr. 14, 1987, then-IRS Commissioner Lawrence B. Gibbs suggested that some agents "need more training in how to be courteous." Follow that up with the March 1, 1999, conclusion of the General Accounting Office that "The IRS cannot do some of the basic accounting and record keeping tasks it expects American taxpayers to do."

Current Secretary of the Treasury Paul O'Neill, in talking about the Internal Revenue Code, remarked on Apr. 26, 2001, that "it is an abomination. Interpreting it is an awful thing to ask human beings to do.... Administering the tax code so that you never, ever, make a mistake is, I would submit to you, impossible." Then, talk to your auditor about removing any penalties he may have been contemplating.

The IRS is infamous for its public blunders. In January, 2001, for instance, taxpayers calling phone numbers listed in two IRS publications were referred to adult content chat lines. Maybe the IRS confused "taking it all off" with deducting an expense. In August, 2001, it was revealed that as many as 40,000 Federal tax returns, requests for extensions, and other tax forms were destroyed or hidden at an IRS processing center in Pittsburgh. According to Sen. Max Baucus (D.-Mont.), chairman of the Senate Finance Committee, his office has received calls from more than 21,000 taxpayers asking about uncashed checks. Millions of dollars were lost in payments that disappeared.

Moreover, 2001 in Pittsburgh wasn't the first time the IRS lost important documents. Remind them of that if they get testy about a missing receipt in an audit. Back in the 1980s, it was disclosed that tax returns were being destroyed or mishandled by IRS employees in Philadelphia and elsewhere. Those allegations eventually resulted in the Congressional reforms imposed on the IRS in the 1990s. Obviously, there are some people working for the IRS who have...