updated 6/8/2007 1:27:16 PM ET 2007-06-08T17:27:16

Hotel operator Marriott International Inc. said Friday it will pay $220 million in a settlement with the Internal Revenue Service and the Department of Labor over deductions it took related to its employee stock ownership plan.

Marriott said the settlement will result in a charge of $54 million, or 13 cents per share, and a reduction in shareholder equity of $114 million in the second quarter. The company will pay the $220 million in cash for income taxes, excise taxes and interest charges, but said no penalties were assessed.

The IRS audited Marriott's 2000-2002 tax returns because of $1 billion in deductions the company took from the employee stock ownership portion of a program called "Employees' Profit Sharing, Retirement and Savings Plan and Trust." Marriott said it has resolved all issues related to the audits.

Marriott Chief Financial Officer Arne Sorenson said the company was "pleased to reach this compromise bringing this dispute to a swift and final resolution."

The company is the world's largest hotel operator by revenue, with brands that include Marriott, Ritz-Carlton and Courtyard.

Copyright 2007 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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