Newspaper article THE JOURNAL RECORD

Guess Whose Records Are All Fouled Up

Newspaper article THE JOURNAL RECORD

Guess Whose Records Are All Fouled Up

Article excerpt

NEW YORK -- If your household financial records were in the same shape as those of the IRS you couldn't possibly survive an audit.

The IRS itself cannot.

On June 6, the IRS' outside auditors reported they were "unable to express an opinion on the reliability" of the service's financial statements because of gross errors and omissions in IRS accounting.

This is the equivalent of an accounting firm declining to certify the financial statements of a corporation, an event that would instantly impact the company's business, its reputation and the value of its stock.

But, in the opinion of the General Accounting Office, the "outside auditor" for government agencies, uncertifiable records are almost routine at the IRS, where problems remain uncorrected year after year.

You might say the situation, and the inability to resolve it, is one of the better arguments for tax simplification. That and the cost, and what some critics see as the assault on the rights and privacy of ordinary citizens.

Anyone who has ever been audited by the IRS isn't likely to forget the financial specifics they must produce to justify a few dollars of deductions. But the IRS cannot do that for tens upon tens of millions of dollars.

"It is the height of temerity," says Dan Pilla, a young tax litigation consultant to attorneys, accountants and individuals who probably has read more pages of IRS manuals than any person alive, including the commissioner.

Consider the irony, he says: "The IRS demands the average citizen keep accurate records when the trained accountants and financial investigators of the IRS have no clue how to keep track of their own income and expenses."

This is the fourth annual audit in which the GAO has attempted without success to express an opinion on the reliability of IRS financial statements. And the prospects for doing so apparently aren't good. …

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