This week, Charles Grassley of Iowa, the top Republican on the Senate Finance committee, concluded that America's most-hated federal agency needs an audit of its own. In a letter to the Bush administration, Grassley called the shoddy record-keeping "shocking" and threatened to slap limits on the agency's budget.

"The IRS wouldn't accept from a taxpayer the non-answer it has given regarding the missing 2,300 computers," Grassley said. "Just as a taxpayer would be held accountable for missing receipts, so must the IRS be held accountable for missing 2,300 computers."

Grassley said that until the mystery PCs were unearthed, Congress could no longer take the IRS seriously when it asked for billions of dollars to spend on its highly touted modernization project.

The report from the Treasury Department's Inspector General, dated Nov. 29, 2001, said that the IRS was "unable to easily provide information concerning the number of lost or stolen computers during the course of this review. Though total counts were eventually provided, no detailed numbers of lost, stolen, or damaged items of inventory could be provided. This was due, in part, to the manner in which missing items are recorded on the inventory records."

Also unclear is what confidential taxpayer information might be stored on the missing computers.

Bruce Friedland, an IRS spokesman, said "the missing computers haven't compromised taxpayer information." When asked whether confidential tax returns and audit records might be stored on the computers' hard drives, Friedland replied: "I believe the answer to that is 'Yes.' But I believe the software applications are not easily available for anyone to use."

Friedland also said that 1,597 of the misplaced or stolen PCs have been found since last November. "I don't have where they were located nor where they are located. They're not all in one place," he said.

In addition to mishandling some of its 163,000 computers -- that number includes the missing and found machines -- the IRS seems to have a problem keeping track of its firearms, badges and radios.

The Inspector General concluded that 502 "investigative items" were lost or stolen, including 40 badges for IRS agents, 50 radios and "15 electronic surveillance devices that could compromise the public's safety or ongoing investigations." (No further details were given, except for a brief note saying: "Information determined to be restricted from public release has been redacted from this document.")

Reported incidents include an IRS agent losing his firearm after his unlocked car was robbed, and another agent dropping a gun into the ocean during a boating accident.