The Internal Revenue Service has settled a claim against the founders of Houston's Kid-Care for about $1,000 — a tiny fraction of the hundreds of thousands that Texas Attorney General Greg Abbott claimed the couple had stolen from the charity.

The agreement, dated Nov. 7, says Carol Porter owes $938.93 in unpaid taxes from 2001 and 2002, while her husband, Hurt Porter, owes $37 from 2002. The document stipulates that the Porters have not acknowledged any improper expenditures.

In a lawsuit filed in April 2003, Abbott said the Porters had used some of the charity's funds for personal expenses such as airline trips and lavish meals.

Abbott settled the case with the Porters' insurance company for $495,000 in August 2004.

Abbott's investigation identified almost $500,000 in questionable expenses the Porters billed to Kid-Care's credit cards from 1999 through 2002. The IRS case involves the Porters' tax returns from 2001, 2002 and 2003.

"The expenses laid out by the attorney general seemed to be the same expenses that the IRS was questioning," said Juan Vasquez, a tax attorney who represented the Porters.

Pitt sued the federal government on behalf of its former employees in 2004, arguing early retirement payments between 1996 and 2001 were not taxable wages because faculty members surrendered tenure as a condition of receiving the money.

A federal district court judge agreed, in part. But the 3rd U.S. Circuit Court of Appeals overruled that decision.

The 2-1 court majority says the faculty received the money for past service - making it wages. Pitt says it's not clear whether it will appeal.

The Internal Revenue Service intends to improve international tax administration in an effort to reduce the tax gap.

As part of that effort, the IRS said it would increase its outreach to international taxpayers, as well as taxpayers in U.S. territories such as Guam, Puerto Rico and the U.S. Virgin Islands, while it beefs up enforcement. "We are challenged by a lack of information reporting on many cross-border transactions," said the IRS in a page recently posted on its Web site.

The IRS intends to strengthen its information reporting and withholding systems, enhance its access to international data, and "ensure adherence to professional standards by tax professionals."

The IRS also wants to improve its cooperation with treaty partners to identify inappropriate tax arbitrage and abusive schemes, and provide greater transparency on cross-border transactions. One goal is to detect financial criminal activity involving offshore entities.

Modernization of technology, staff and business processes will play a role in the effort. The IRS hopes to improve its systems for capturing and using information reported by treaty partners to improve U.S. taxpayer compliance.

The agency intends to identify the workforce skills it needs to address emerging international issues and develop training for its employees so they can get these skills. The IRS will also improve its forms and processing systems, and assess its referral systems and resources to make sure that high-risk issues are dealt with in a timely way.

Beginning in 2006, certain corporations that had assets greater than $50 million were required to file their basic tax forms electronically. Approximately 15,500 of them filed their returns electronically last year. Starting in 2007, certain businesses with assets of more than $10 million had to file electronically.

"Corporations of all sizes are seeing the long range advantages of integrating their tax filing in an electronic environment along with their tax and financial accounting," said IRS Treaty Administration Director Elvin Hedgpeth. "While large and mid-size corporations are required to e-file, many small corporations are seeing the advantages of e-filing voluntarily."

Tournament sponsors who comply with the reporting requirement don't need to withhold taxes on the winnings. If the sponsor does not report the winnings, though, the IRS will enforce the reporting requirement and require the sponsor to pay any tax that should have been withheld from the winner. The withholding amount is normally 25 percent.

Tournament winners must provide their taxpayer identification number or Social Security number to the tournament sponsor. If they don't, the sponsor must withhold 28 percent of the winnings. Taxpayers must also report their winnings on their own to the IRS, as they have been required to do in prior years.

Reached Tuesday, Kirk declined to say why he and his wife, Erika, 73, decided to settle the suit rather than fight the IRS in a trial scheduled for next month.

"Let's let it lie for the moment," he said. "It's a long story, but an interesting one."

In a lawsuit filed in March, the IRS claimed Kirk put the home in his wife's name to avoid paying taxes dating to 1995.

In depositions, the couple insisted that she owns the house. However, government attorneys pointed out that on tax returns in 2001, 2002 and 2003 he deducted about $8,000 each year in mortgage interest.

While acknowledging he signed the returns, he insisted: "It's my wife's home, and that is it."

During an August deposition, he said he has been harassed by the IRS since he left the governor's office in 1971, having sealed his place in history as the state's first Republican governor since Reconstruction and the most flamboyant chief executive of either party - ever.

"I left the governor's office broke, b-r-o-k-e, because if you don't steal, it's not a very good job," he told government attorneys. "And I've been harassed by the IRS ever since. They had a system, started with the Carter administration, saying, 'Oh-oh, anybody who has been a politician has got money.' They've been rattling the cage forever."

He declined to say how much he made annually or exactly what he does for a living. He bristled when IRS attorneys attempted to question him about his 2001 tax return that reported $183,540 in earnings.

"I try to have people pay me for advice," he said. "Some of them take that advice and some don't pay me. It's not an easy business. I have no assets. I came out of being governor broke, and it hasn't changed."

The IRS declined comment on the settlement that must be approved by U.S. District Court Judge Donald Middlebrooks.