Tax Strategies

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.

Wolters Kluwer Tax, Accounting & Legal announced that it will open an office in India for its CCH unit and other related businesses.

Somewhere in my parents’ attic, there resides a copy of Vanilla Ice’s debut album, “To the Extreme.”

A Florida auditing firm will pay $500,000 to avoid a lawsuit with officials in Nassau County, located in the northeast corner of the state.

The New Year began with a symbolic victory for Big Four firm KPMG, as a federal judge here dismissed a criminal conspiracy charge against the U.S. arm of the Big Four firm for conspiring to sell illegal tax shelters.The charge was dropped after prosecutors said that the firm had met its obligations under a deferred-prosecution agreement struck with the government roughly 18 months ago.

Tax preparation service Jackson Hewitt Inc. will pay $5 million to settle allegations that it violated state and federal laws when marketing its refund anticipation loans to California customers. California Attorney General Bill Lockyer said that the tax preparer will pay $4 million in restitution to customers who purchased same-day "Money Now!" loans and other loan products. The company will also pay $500,000 in civil penalties and $500,000 to reimburse investigative costs.Lockyer's complaint alleged that Jackson Hewitt violated 13 state and federal laws, and also shared consumers' tax information without their consent.

The latest American Institute of CPAs' Statement on Standards for Tax Services has some practitioners upset that it could hurt smaller firms that are primarily engaged in tax preparation.SSTS 9, available on the AICPA Tax Center Web site, was released a year ago in proposed form and is slated to go into effect on June 30, 2007. It "sets forth the applicable standards for members concerning the obligation to have a system of quality control for their tax practice (public practice) or function (nonpublic practice)."