NEW YORK (CNN/Money) - KPMG may avoid criminal charges in a probe of its roles in questionable tax shelters, but the leading accounting firm could be faced with hundreds of millions in fines, according to a published report.

The New York Times reported Thursday that negotiations between federal prosecutors and KPMG appear to have ruled out an indictment of the firm, according people briefed on the discussions.

But the paper reports the firm could pay as much as $500 million in the case.

The talks, which are continuing, remain fragile, the paper reports, and criminal charges are still possible. But it said at this point KPMG seems likely to avoid an indictment for selling the tax shelters.

The Times reports a settlement would require KPMG to meet certain terms, including the establishment of an independent monitor to ensure the firm's good conduct and a "clear statement" admitting the firm's culpability.

The paper reports that the status of separate talks between prosecutors and lawyers for individual former partners in KPMG's tax practice is not clear. Those partners lawyers have tried to persuade the tax division of the Justice Department not to approve prosecutors' efforts to indict them, according to the paper.

The investigation into the tax shelters, which the paper reports cost the government as much as $1.4 billion in taxes, has been going on for about 18 months.

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