The Internal Revenue Service has given companies 30 days to agree to a settlement to close their tax shelters.

The program is aimed at lease-in/lease-out and sale-in/lease-out transactions. Companies that agree to the settlement have until Dec. 31 to shut down their LILO and SILO transactions. If they don't, the IRS may pursue cases against them.

The IRS designated LILOs as "listed transactions" back in 2000 and SILOs in 2005. Since then, the IRS has gone to court and challenged the deals as having no purpose other than to create tax benefits for the companies that use them. The deals often involve companies purporting to lease or buy property, including government infrastructure such as bridges, but then leasing it back to the original owners.

Under the settlement, companies would not have to pay penalties, and would be able to retain 20 percent of the interest income they earned from the investment funds, but they would have to pay the other 80 percent back to the IRS.

"As a basic matter of fairness to all taxpayers, the IRS cannot allow LILO and SILO deals to stand," said IRS Commissioner Douglas Shulman (pictured). "The time has come for these shelter participants to put these cases behind them, and the best way for them to do so is to act on the settlement offer they will receive today."

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