"Time is running out for tax filers to take advantage of the special telephone excise tax refund and other benefits such as the Earned Income Tax Credit," IRS spokesman Dan Boone said in prepared comments.

"If you don't claim it, you don't get it. That's money down the drain for thousands of Tennesseans."

In addition, many taxpayers also overlook free services available to them, such as free tax help and the Free File program.

Still others lose out by not filing a return at all. Even if a taxpayer does not owe tax and is not required by law to file a return, he may miss out on a refund or tax credit.

Here are some refunds, credits or services Boone says are frequently overlooked:

Telephone Excise Tax Refund - This is a one-time refund of long-distance excise taxes available on 2006 income tax returns. The refund applies to charges billed from March 2003 through July 2006.

The IRS offers a standard refund amount of $30 to $60, or taxpayers can calculate the actual tax paid. Even if the taxpayer does not normally have to file a return, Form 1040EZ-T can be used to request this refund.

Businesses and exempt organizations can also request it. Taxpayers can visit IRS.gov for more information on this special payment.

"Tennesseans have already left more than $12 million on the table by failing to request this special refund," Boone said.

IRS Free File - Nearly 20 companies are offering free electronic filing to taxpayers whose 2006 adjusted gross income was $52,000 or less. That means 1.9 million Tennesseans can take advantage of the IRS-sponsored Free File program.

"Free File users get all the benefits of IRS E-file: a faster refund, a virtually error-free return, and confirmation that the IRS received your tax return," Boone said. A link to Free File offerings is located on the IRS.gov homepage.

Earned Income Tax Credit - Earned income of less than $39,000 in 2006 may qualify a taxpayer to claim the earned income tax credit.

This credit could be worth up to $4,536.

When the EITC exceeds the amount of taxes owed, it results in a tax refund to those who claim and qualify for the credit.

To qualify, taxpayers must meet certain requirements and file a tax return, even if they did not earn enough money to be obligated to file a return. An electronic special "EITC Assistant" is available on IRS.gov to help taxpayers determine whether they are eligible.

Taxpayers can access more information on this credit by visiting IRS.gov and clicking on "1040 Central."

"More than half-a-million Tennesseans claimed EITC last year, but the IRS estimates that another 20 to 25 percent could be claiming it," Boone said.

Unclaimed Refunds - Refunds totaling approximately $30.8 million are waiting for about 27,600 Tennesseans who failed to file a federal income tax return for 2003.

In order to collect the money, a return for 2003 must be filed no later than April 17.

The IRS estimates that half of those who could claim refunds would receive more than $600. In some cases, individuals had taxes withheld from their wages, or made payments against their taxes out of self-employed earnings, but had too little income to require filing a tax return.

The Internal Revenue Service reports that a large number of cell-phone users are overlooking the telephone tax refund mistakenly believing that the one-time refund only applies to land-line customers.

According to the IRS, most cell-phone users qualify for the federal telephone excise tax refund. In most cases, the refund is also available to land-line, fax and Internet phone customers as well. The method of phone signal transmission does not affect the refund. The telephone-tax refund can add $30 to $60 -- or even more -- onto a taxpayer's refund.

"Many taxpayers are overlooking this special refund and the chance to get a bigger refund," said IRS Commissioner Mark W. Everson. "We encourage taxpayers to spend a few extra minutes reviewing their tax return to make sure they are making an accurate request. A little extra time can mean a bigger refund check."

The government stopped collecting the long-distance excise tax last August after several federal court decisions held that the tax does not apply to long-distance service as it is billed today. The tax continues to apply to local-only phone service.

Federal officials also authorized a one-time refund of the three-percent tax collected on long-distance or bundled service billed after Feb. 28, 2003, and before Aug. 1, 2006. Bundled service is local and long-distance service provided under a plan that does not separately list the charge for local service. Bundled service includes, for example, phone plans that provide both local and long-distance service for either a flat monthly fee or a charge that varies with the time for which the service is used. It is the type of service provided by many cell-phone companies.

"We want all taxpayers entitled to this refund to get it, whether they are using a tax preparer or doing the return themselves," Everson said.

So far this year, about three in 10 tax returns received by the IRS are not requesting the telephone-tax refund.

The United States has filed a suit in federal court in Raleigh seeking to bar Raymond A. Renfrow of Elm City, N.C., from preparing federal income tax returns for others, the Justice Department announced today. The suit, filed in the U.S. District Court for the Eastern District of North Carolina, alleges that Renfrow prepared tax returns for customers that contained fictitious or inflated deductions. The suit alleges that Renfrow has prepared an estimated 993 returns since 2001 that have caused an estimated loss to the U.S. Treasury of more than $2.9 million.

The complaint further alleges that Renfrow prepared false and fraudulent federal trust returns based on a tax fraud scheme promoted by Trust Education Services and National Trust Services. Information on other court cases related to those schemes is available at: http://www.usdoj.gov/tax/txdv04081.htm and www.usdoj.gov/tax/prtax/txdv03332.htm. Misuse of trusts is included in the IRS's 2007 list of the Dirty Dozen tax scams. http://www.irs.gov/newsroom/article/0,,id=167983,00.html

The lawsuit asks the court to order Renfrow to provide a list to the Justice Department of his customers' names, addresses, e-mail addresses, and Social Security numbers. Since 2001 the Justice Department has obtained more than 230 injunctions to stop the promotion of tax fraud schemes and the preparation of fraudulent returns.

The word is spreading among the thousands of cocktail waitresses, food servers, bartenders, busboys and bellhops who make most of their money from tips. The rank-and-file workers complain that they were not consulted on the new tip formulas.

If there really is more money in town, said Arturo Valadez, a sommelier at Mandalay Bay, it's not necessarily reaching workers' pockets.

"I'm not against paying (more) taxes, but the way they are doing it isn't necessarily the most accurate or effective," he said.

The issue is coming to a head as the IRS and Las Vegas casinos negotiate a new agreement on how much tip income workers should declare to avoid being audited by the government.

Since the early 1990s Las Vegas casinos and the IRS have agreed on how much tip income the employees should declare.

Since then, the IRS has struck similar agreements with other industries nationwide, including restaurants, hair salons and barbers. In total, tip agreements with employers have yielded billions of dollars in additional taxes for the government. Included in the voluntary participation are more than 47,000 establishments nationwide. That the agreements were born in the cash-rich casino industry is apparent in the IRS tip-reporting guide for taxpayers, which specifically mentions casino workers and features an illustration of a royal flush on its cover page.

The agreements, much like hard-won union contracts, are complex, site-specific and subject to change. Each tipped position at each participating Las Vegas casino has its own tip estimate because casinos individually negotiate rates, which differ by shift and job.

A food server in a coffee shop during the day shift, for instance, might be expected to declare $13,000 in tip income, whereas a swing-shift server in a full-service restaurant could be required to declare more than $20,000 in tip income. Employers withhold taxes on the estimated tips.

The agreements ease the paperwork burden for workers and the IRS. Workers don't have to track their tips, and the IRS doesn't spend time auditing workers.

And workers know a good deal when they see it: Many earn more in tips than the amount estimated by the IRS.

That's probably why, according to the IRS, 80 percent of Nevada's more than 100,000 tip-earning hotel workers participate in the agreement program, which is voluntary for employers and workers.

More than four years ago the casino industry fought to keep down proposed tip rates that lobbyists said would have doubled, tripled and even quadrupled workers' claimed tips. Both sides wrangled over rates in the years leading up to the three-year tip agreement reached in 2003. Hoping to capture even more unreported tips, the IRS expanded the template of the Nevada agreement to casinos nationwide.

The local tip agreements expired Dec. 31, although the old rates apply until a new agreement is reached in coming weeks.

Even though tip rates probably will go up for many Las Vegas casino workers, the alternative to participating in the tip agreement isn't all that appealing.

The IRS requires tipped workers who don't participate in the agreements to track daily tips and report the aggregate on their tax returns - and risk being audited. The IRS offers a worksheet with spaces for tips earned each day, a separate column for tips shared with others and spaces for co-workers' names.

After spending eight hours on their feet at work, most are unlikely to spend their free time logging tips on a spreadsheet.

That's why the IRS negotiated rates that might be less than actual tips yet guarantee a stream of tip taxes - up to $900 million annually in Nevada - that might otherwise go uncollected.

The American Gaming Association, which helped casinos negotiate the 2003 agreement, is involved in the latest round of discussions with the IRS.

A spokesman for Senate Majority Leader Harry Reid, D-Nev., who has assisted the industry in the negotiation process, said the IRS has agreed to phase in tip-rate increases over the three years of the new agreement rather than hit workers with a bigger tax bill all at once. The phased-in increase would extend beyond Nevada to include New Jersey, the Gulf Coast and other U.S. casino markets.

The second step of the process - determining the tip rates for each casino - has been more time consuming and contentious, with the IRS "pushing for substantial increases for certain positions," Reid spokesman Jon Summers said.

IRS, American Gaming Association and Culinary Union representatives are meeting this week to iron out a compromise.

The Culinary, which began union contract negotiations with Strip casinos two weeks ago, isn't taking any chances. The union, which represents 55,000 tip-earning workers, is proposing that employers contribute to a "defense fund" to assist employees who choose not to participate in the upcoming agreement and therefore might become subject to IRS audits.

"A coffee shop waitress on graveyard can be audited after she decides not to participate because she thinks rates are too high. We don't think that's fair," Culinary Union Secretary-Treasurer D. Taylor said. "A casino executive who gets called in for an audit and is questioned has legal representation. An individual worker should not have to take on the IRS by himself."

For now, the casinos appear to have the upper hand in this high-stakes game. The industry has threatened to chuck the program entirely - a potential tax loss in the billions for the IRS - unless the agency can agree to a smaller increase in tip rates.

"The rates (the IRS is) talking about are quite scary to folks," Taylor said.

Distributed by Scripps-McClatchy Western Service, www.scrippsnews.com.

Dallas law firm Jenkens & Gilchrist will close and pay a $76 million fine to settle a federal criminal tax-shelter probe, government officials said Thursday. 
 
The penalty stems from the firm's "promotion of abusive and fraudulent tax shelters in violation of the tax law," the Internal Revenue Service said.

Jenkens & Gilchrist, which had more than 600 attorneys until recently, intends to close its main office in Dallas at the end of the month, after having already closing other offices, the U.S. Attorney's office said.

The firm was shutting down because it realized its illegal activities had "caused serious damage to its reputation, revenues and stability," the U.S. Attorney's office said.

The law firm did not have an immediate comment, but in an earlier statement said, "We deeply regret our involvement in this tax practice, and the serious harm it caused to the United States Treasury."

The IRS said some 1,400 high-net-worth investors followed Jenkens & Gilchrist's advice "and will owe interest and penalties on their underpayment of tax."

Chipmaker Intel Corp. said on Thursday it will set aside $275 million less than it had planned for taxes as a result of a settlement with the U.S. Internal Revenue Service, and says its 2007 tax rate will be lower than expected.

The IRS told Intel on Tuesday it closed its examination of the chipmaker's tax returns for the years 1999 to 2002, resolving several issues, including the tax benefit for export sales. The two sides also agreed on the tax benefit for export sales for the years 2003 through 2005.

In connection with the settlement, the company expects to reverse previously accrued taxes, which will reduce the current quarter's tax provision and reduce the income tax rate for 2007 below the previous forecast of about 30 percent.

In February, Intel said it would appeal an IRS tax adjustment related to export sales that could increase its tax due by $2.4 billion from 1999 through 2006.

Intel has been contesting the issue since August 2003 when the IRS first gave it notice of the adjustment.