KPMG will pay $456 million in fines under an agreement with federal authorities to avoid prosecution for selling abusive tax shelters, people familiar with the matter said.

The settlement, under negotiation since June, will be unveiled in Washington today, the people said. The announcement may also include indictments of as many as a dozen former partners of the accounting firm, they said.

The agreement is the government’s biggest victory in its fight against tax shelters that proliferated in the 1990s. Avoiding criminal prosecution may enable KPMG International’s American arm to avoid an exodus of clients, which led to the closing of Arthur Andersen after its indictment for obstruction in 2002. The deal marks a surrender for KPMG, which fought the government after rivals Ernst & Young and PricewaterhouseCoopers paid fines of as much as $20 million.

“KPMG elected to fight to the bitter end, and then they discovered what the bitter end was and decided, ‘Hey, let’s not do that,'” a former IRS Commissioner, Donald Alexander, said. Mr. Alexander is now a partner with Akin, Gump, Strauss, Hauer & Feld, a law firm in Washington.

Under the terms of the deferred prosecution agreement, KPMG will pay the $456 million fine in three installments, the people familiar with the matter said. The first installment, due next week, will be about half the amount. The firm will pay $100 million in June 2006 and another $100 million in December 2006.

Attorney General Alberto Gonzales, Internal Revenue Service Commissioner Mark Everson, and U.S. Attorney David Kelley will announce the settlement, the people said. U.S. District Judge Loretta A. Preska, who must approve the agreement, will hold a hearing earlier in New York.

KPMG also agreed not to take on any new tax clients for 30 days while it retrains its advisers on new standards, the people said. Under the agreement, all tax opinions given to clients must be likely to survive an IRS audit, the people said. The previous standard required that the shelters be “more likely than not” to win IRS approval.

A former Securities and Exchange Commission chairman, Richard Breeden, will monitor the firm’s compliance with the agreement, the people said. If the firm meets the terms of the deal, the deferred criminal charges against it will be dismissed in December 2006, the people said.

Mr. Breeden, who was appointed to the SEC by the first President Bush in 1989 and served until 1993, didn’t return calls for comment. A KPMG spokesman, George Ledwith, declined to comment. A spokesman for the U.S. Attorney’s Office in Manhattan, Herb Hadad, also declined to comment.

Arthur Andersen lost most of its partners and clients after being accused by the Justice Department of obstructing an investigation into its audit client, Enron, the now bankrupt energy trader. Andersen’s conviction, overturned by the U.S. Supreme Court in May, came too late to resurrect it and reduced the number of large accounting firms to four.