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The IRS caught a big fish.

The federal tax-collecting agency settled a dispute with drug-maker Merck & Co. and its subsidiaries.

The bottom line: Merck will pay $2.3 billion in federal taxes, net interest and penalties to resolve a dispute regarding tax years 1993 to 2001.

The resolution is one of the largest achieved in recent years by the IRS and a taxpayer through the examination process.

Both the IRS and Merck acknowledge that reaching an agreement of this magnitude was the result of cooperation by both parties. To facilitate this agreement, the IRS and the taxpayer used various issue management strategies, including the Fast Track Settlement Program.

Among the significant issues resolved were three that resulted from Merck's use of minority equity interest financing transactions. The execution of these agreements should facilitate the ability of the IRS and the taxpayer to move forward and effectively address tax issues arising in subsequent examination years.

It's a landmark tax settlement, to be sure. And it's also evidence that the IRS is taking tax collection and enforcement seriously.

Unfortunately for everyday taxpayers, however, the IRS isn't interested only in multinational conglomerates that pay millions of dollars in taxes.

The agency is also interested in people like you who might make the bad decision of evading taxes or defrauding the IRS.

In recent weeks, the IRS has announced the following cases:

- Nancy Adams, a Las Vegas prostitute, was so successful that the federal government went after her for tax charges. She was sentenced to 15 months in prison for evading the payment taxes on her illegal proceeds.

- Six people from Birmingham, Ala., are looking at five years in prison each after federal prosecutors charged them with filing 121 fraudulent returns that netted $700,000 in false income tax returns.

- Jamal Sobhi Lashin, 49, of Scottsdale, Ariz., is headed to jail for 12 months after understating the income he received from his liquor stores.

- Charles Wayne Willard Sr., of Alexander City, Ala., will spend the next 24 months behind bars after he reported his 2002 income as $38,436 when, in fact, he earned $1.28 million that year. He tried to evade paying $460,000 in taxes.

The point of these stories: When hearing of tax cases such as the one involving Merck, don't assume the IRS is interested only in monitoring corporate giants.

Federal agents are also interested in your taxes.

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Steven N. Klitzner is a Certified Tax Resolution Specialist, a member of the American Society of IRS Problem Solvers, a consulting member of the Tax Freedom Institute, and an Aventura attorney.  You can contact him at 305-682-1118 to obtain a free subscription to his newsletter titled The IRS Times & Inquirer or call 305-654-0000 for a free copy of his special report.