As part of an agreement with the Internal Revenue Service, Big Four firm Ernst & Young will implement a new program that will ensure compliance with the law relating to creating and marketing of tax shelters, and the firm has agreed to make a $15 million non-tax deductible settlement with the IRS.

The new E&Y Quality and Integrity Program will "ensure the highest standards of practice and ongoing compliance with the law and regulations," according to IRS Commissioner Mark W. Everson. Mr. Everson described the settlement as "a real breakthrough" and "a good working model for agreements with practitioners."

Both KPMG and E&Y have been under investigation by the U.S. Senate Permanent Subcommittee on Investigations and the IRS for marketing potentially abusive tax shelter schemes. In addition, both firms are facing lawsuits from clients who participated in such shelters.

The investigations are part of a larger program in which the IRS is examining tax shelter promotions by 90 other firms.

According to the terms of the E&Y agreement with the IRS, the firm will turn over to the IRS lists of tax shelter participants. Names of participants and details of the shelters they purchased will be provided to tax examiners. Meanwhile, KPMG and BDO Seidman are battling with the IRS to keep similar client information private.