[JURIST] The Internal Revenue Service [official site] announced Tuesday a plan to reduce penalties for executives and companies that admit to using an abusive tax shelter designed to avoid taxes on stock options. IRS Commissioner Mark Everson said that the agency had identified 42 well-known corporations with executives who failed to report more than $700 million in income. Under the deal, executives would pay a 10 percent penalty rather than the maximum 20 percent if they come clean by May 23. No penalties would be assessed against corporations. Tax laws require executives to count as income the value of stock options when they are exercised. However, in a typical shelter, the corporation grants stock options to an executive, who holds them in a separate company and defers paying tax on the options for 15 to 30 years. The full statement from the IRS is available here. AP has more.