BDO’s US firm has agreed to pay a $50m settlement to the US tax collector Internal Revenue Service (IRS) for its part in an illegal tax shelter scheme.

The US Attorney for the Southern District of New York said BDO admitted to criminal wrongdoing in a tax shelter scheme that helped wealthy clients in the evasion or attempted evasion of approximately $1.3bn in taxes.

BDO reached a resolution with the IRS and US Department of Justice over its involvement in tax shelters between 1997 and 2003. 

The firm said the penalty would have “no impact” on its business operations and client services.

“This is the latest step in the federal government’s investigations of numerous national accounting, law and financial services firms, which began almost ten years ago,” the firm stated. “BDO has co-operated with the IRS and the United States Attorney’s office and will continue to do so. BDO is pleased that these matters have been brought to a resolution,” the firm said in its statement.”

The US Attorney’s Office said that as part of the resolution the firm agreed to certain restrictions and controls on its tax practice as well as having to implement and maintain an effective compliance and ethics programme.

Manhattan US Attorney Preet Bharara said the agreement is the “latest successful result in a multi-year effort to unravel this massive fraud and hold to account those individuals and entities responsible for depriving the IRS of billions of dollars in revenue”. 

“Tax cheats – be they individuals who file false returns or businesses that help them carry out their deception – will not be tolerated,” Bharara said.

BDO’s former chairman and chief executive Denis Field was indicted in June 2009 for leading the fraud and is currently awaiting a retrial. Five other BDO partners and/or principals pled guilty to tax crimes and are awaiting sentencing.

They were all members of the firm’s Tax Solution Group, under which the firm and its co-conspirators allegedly developed, marketed, sold and implemented illegal tax shelter products targeted to wealthy clients with expected income or gains exceeding $5m.