MCI Inc., formerly WorldCom Inc., will pay $331 million to 15 states and the District of Columbia to settle back tax claims and charges that it engaged in accounting fraud.

The states accused MCI of illegally shielding billions of dollars from state taxes between 1999 and 2002 using a royalty tax plan created by KPMG. The states alleged that the tax plan allowed MCI to charge subsidiaries $24 billion for management expertise -- defining the transfers as royalties and shielding the income from state taxes.

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