Tax

The Internal Revenue Service has rolled out its annual list of the 12 most blatant tax return scams.The “Dirty Dozen” highlights a handful of new scams for the 2006 tax year that IRS auditors and criminal investigators have repeatedly encountered. Topping the list are fraudulent refunds being claimed in connection with the one-time Telephone Excise Tax Refund.

A trio of senators have proposed legislation targeting overseas tax havens.According to a bill summary released by Sen. Carl Levin, D-Mich., such havens cost the United States upwards of $100 billion a year in lost tax revenues.

The California Society of CPAs passed the 30,000-member threshold in late January.In a statement announcing the milestone, the society credited a continuing “trend of California CPAs flocking to CalCPA for advocacy, technical guidance and professional resources” for boosting its numbers.

Requests for exorbitant phone tax refunds has prompted the Internal Revenue Service to send special agents into seven cities to execute search warrants at tax prep businesses.According to affidavits filed in federal court, the agency is seeking evidence from preparers suspected of filing returns on behalf of clients that requested “egregious amounts” for this year’s special telephone excise tax refund.

A federal judge in New York has ruled that the Internal Revenue Service will not have to release documents that defendants in the KPMG tax shelter case claim reveal that some IRS personnel did not believe the Big Four firm was required to register the shelters.

Chicago attorney Robert Wayne Hallock was sentenced to serve two years in prison for a tax evasion charge.Hallock, formerly a partner at the law firm of Kirkland & Ellis LLP, was found guilty of attempting to evade taxes on more than $1 million in income following a weeklong trial in October. He will serve two years of supervised release after his release from prison.

The Internal Revenue Service said that it will renew contracts with two out of the three private agencies it signed to participate in a pilot program outsourcing debt collection. Conspicuously absent from that announcement was the fate of that third agency.The IRS said yesterday that it would extend the contracts of Waterloo, Iowa-based CBE Group Inc. and Arcade, N.Y.-based Pioneer Credit Recovery Inc., a unit of SLM Corp. The new contract will run through March 8, 2008.

Actor Paul Hogan, best known as the star of the “Crocodile Dundee” film triology, has been formally linked to court proceedings involving Australia’s largest-ever investigation of tax fraud.According to the newspaper The Australian, a string of nearly two dozen companies associated with Hogan, his financial adviser Anthony Stewart and his artistic collaborator John Cornell, have been cited in federal court relating to an alleged $300-million fraud.

Pharmaceutical giant Merck & Co. announced that it would settle a number of tax disputes with the Internal Revenue Service at a net cash cost close to $2.3 billion.

The Internal Revenue Service and the U.S. Treasury announced that they have released guidance on the estimated tax penalty for citizens or residents of the United States living and working abroad.The Tax Increase Prevention and Reconciliation Act of 2005, which was enacted in May 2006, changed the maximum amount of foreign earned income and housing costs that can be excluded from gross income -- increasing the maximum amount of foreign earned income that may be excluded from gross income to $82,400 and limiting the amount of housing costs that may be excluded or deducted.