(The second is legitimate, it too put me out of a job in 1987 and on a bad career path for a long while, but the problem was more with the Congress that removed the safe harbor just for us "technical professionals" than the IRS which then enforced that.)
My only caveat is that as far as I remember this is something that Pat Moynihan in the middle of the night slipped into a COBRA bill (one of those last minute 1,000 page catch alls to continue funding the government) instead of something subjected to any debate in the Congress. Yep, it did happen in the same year as the tax changes, but not e.g. in the same bill or as I recall at the same time.
Then again having lost my job I didn't care that much about the details, which weren't particularly available in that pre-real Internet period.
Says also that Moynihan tried to get it repealed a year later, so it could be that he was also successful in spinning it as a considered part of the bill instead of a disastrous favor for a very narrow special interest.