I made a $3 mistake on my income tax return (Scottrade updated my tax info *after* I'd sent mine in, but they didn't notify me).
The IRS apparently took that as an excuse to torment me for most of a year. I got audit for the above $3 claim, as well as for "falsely claiming that I was due a tax deduction for student loans" (I took some night classes at the local community college). Apparently that $3 claim was justification for a fishing expedition.
First time, I take an entire day off to redo my taxes, discover that I have made a $3 error, cut them a $3 check, and sent them the 1098-T from the college to prove that the other claim is false.
Couple months later, they send me the exact same form. I again take another day off to recompute my taxes (I was correct), and again send them the same 1098-T info that they requested.
Third time, I told that I will be taken to court because I haven't provided the proof required. I take yet *another* day off to go to the local IRS office in Nashville and sit down with a lady to explain that I've already sent the 1098-T form in.
She logs into her computer, turns it toward me, and starts hitting page-down. "We don't have any record that you sent it in." I see it flash by and tap on the screen. "Yes you did, it was just on your screen a second ago." She pages up and stares at it in silence for 2-3 minutes. "Well I just don't understand that."
Great. So now that the IRS knows I've sent it in, we can put this whole misunderstanding behind us, right? "I'm sorry, but there's nothing I can do to fix this". My choices were pay it off, send an appeal to the IRS, and hope that suddenly grow a brain after the **4th** time, or go to tax court, lose yet another day's salary, and hope the judge was smarter than the IRS. So I paid.
The IRS's excruciatingly, devastatingly, mind-numbing incompetence cost me roughly $1000 in lost salary for a $3 difference. And the whole collective IRS can go pleasure itself with a saguaro cactus.