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Software Tax (AXcess News) Washington - The Internal Revenue Service today issued the 2006 "Dirty Dozen"--its latest annual tally of some of the most notorious tax scams--along with an alert to taxpayers this filing season to watch out for illegal schemes that promise to reduce or eliminate taxes.

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Every Landlord Tax Deduction Two new scams topping the list -- "zero wages" and "Form 843 tax abatement" -- use IRS forms to claim that filers' tax bills have been wrongly inflated. Also high on the 2006 list is "phishing," a favorite ploy of identity thieves posing as IRS representatives who trick unsuspecting taxpayers into revealing private information that can be used to steal from their financial accounts.

Net income and diluted earnings per share for the three and twelve months ended December 31, 2006 include a reduction of income tax expense related to reversal of provisions for certain income tax contingencies of approximately $0.2 million and $12.8 million, respectively. Net income and diluted earnings per share for the twelve months ended December 31, 2006 also include a loss of approximately $0.3 million ($0.2 million, net of the related tax effect) related to the extinguishment of debt. Those items represent diluted EPS of $0.01 and $0.19, net, for the three and twelve months ended December 31, 2006, respectively. Adjusted diluted EPS and adjusted net income for the three and twelve months ended December 31, 2006 exclude these items.

Tax Help "When it comes to taxes, everyone has to pay their fair share," IRS Commissioner Mark W. Everson said. "I urge taxpayers not to be taken in by hucksters who promise to lower or eliminate taxes. Getting caught up in the Dirty Dozen or similar schemes can lead to big headaches."

Read the family finance guide from Moneynet.co.uk, providing information on family finance issues such as child trust funds (CTF's) and child tax credits.

Help Tax Namely, involvement with tax schemes can lead to imprisonment and fines. The IRS pursues and shuts down promoters of these and numerous other scams. Anyone pulled into these schemes can also face repayment of taxes plus interest and penalties.

United States Tax Court www.ustaxcourt.gov The U.S. related offenses. This site describes the process the court uses, presents FAQs about what's involved when a case goes to tax court, and gives contact information for court offices and judges. Yahoo! Taxes taxes.yahoo.com The giant search engine's Taxes page includes Tax Tips, a Tax Guide For Investors, Tax Education, and resources that can help users find an accountant or talk with others on the Yahoo! message board.

Ernst Ernst Guide Guide Tax The IRS urges people to avoid these common schemes:

Tax Return 1. Zero Wages. In this scam, new to the Dirty Dozen, a taxpayer attaches to his or her return either a Form 4852 (Substitute Form W-2) or a "corrected" Form 1099 that shows zero or little wages or other income.

Return Tax 2. Form 843 Tax Abatement. This scam, also new to the Dirty Dozen, rests on a faulty interpretation of the Internal Revenue Code. It involves the filer requesting abatement of previously assessed tax using Form 843.

Guide Guide Master Master Tax 3. Phishing. Phishing is a technique used by identity thieves posing as representatives of financial institutions or the IRS and sending out fictitious e-mail correspondence in an attempt to trick consumers into disclosing personal financial information. In recent months, IRS has seen this happen by phone. The agency does not call taxpayers alerting them to refunds nor does it use email to initiate contact to taxpayers about issued related to their accounts.

Tax Preparation 4. Zero Return. Promoters instruct taxpayers to enter all zeros on their federal income tax filings.

Preparation Tax 5. Trust Misuse. Unscrupulous promoters falsely promise to reduce tax based on deductions for personal expenses.

Employer Tax Guide 6. Frivolous Arguments. Promoters claim that the Sixteenth Amendment was never ratified; that wages are not income; that filing a return and paying taxes are merely voluntary; and that filing taxes violates the Fifth and Fourth Amendments. Don't believe these or other similar claims. Such arguments are patently false and have been thrown out of court for years.

Tax Services 7. Return Preparer Fraud. Dishonest return preparers skim a portion of their clients' refunds, promise large refunds without reason, and prepare taxes for a percentage of a refund.

Services Tax 8. Credit Counseling Agencies. Taxpayers should be careful with credit counseling organizations that claim they can fix credit ratings, push debt payment plans or impose high set-up fees or monthly service charges that may add to existing debt.

Master Tax Guide 9. Abuse of Charitable Organizations and Deductions. The IRS has observed increased use of tax-exempt organizations to improperly shield income or assets from taxation. This can occur with donor-advised funds or historic facade easements.

Tax Attorney 10. Offshore Transactions. Despite a crackdown by the IRS and state tax agencies, individuals still try to avoid U.S. taxes by illegally hiding income in offshore banks and brokerages, using offshore credit cards, wire transfers, or other schemes.

Attorney Tax 11. Employment Tax Evasion. A number of illegal schemes instruct employers not to withhold federal income tax or other employment taxes from wages paid to their employees. Such advice is based on an incorrect interpretation of Section 861 and other parts of the tax law and has been refuted in court.

Guide Law Tax 12. "No Gain" Deduction. Filers attempt to deduct their entire income on Schedule A under "Other Miscellaneous Deductions" with an attached statement referring to court documents and the words "No Gain Realized."

Tax Accountant Two Fall off the List

Accountant Tax Two noteworthy scams have dropped off the "Dirty Dozen" this year: "claim of right" and "corporation sole." IRS personnel have noticed less activity in these scams over the past year following court cases against a number of promoters.

Circular Employer Tax Guide How to Report Suspected Tax Fraud Activity

Income Tax Suspected tax fraud can be reported to the IRS using IRS Form 3949-A, Information Referral. Form 3949-A is available for download from the IRS Web site at IRS.gov, or through the U.S. Mail by calling 1-800-829-3676. The completed form or a letter detailing the alleged fraudulent activity should be addressed to the Internal Revenue Service, Fresno, CA 93888. The mailing should include specific information about who is being reported, the activity being reported, how the activity became known, when the alleged violation took place, the amount of money involved and any other information that might be helpful in an investigation. The person filing the report is not required to self-identify, although it is helpful to do so. The identity of the person filing the report can be kept confidential. The person may also be entitled to a reward.

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