UPDATE 1-US banks, others offered tax shelter settlement

(Adds details of settlement offer, background)

WASHINGTON, Aug 6 (Reuters) - The Internal Revenue Service said on Wednesday it was offering settlements to more than 45 major U.S. companies, including many big banks, to get rid of tax shelters the agency considers abusive.

"Promoters and participants in aggressive tax shelters should know that the IRS will remain vigilant," IRS Commissioner Doug Shulman told reporters on a conference call.

The IRS will offer companies a settlement for "lease-in, lease-out" and "sale-in, lease-out" transactions, known by the acronyms LILO and SILO.

It said these transactions have allowed companies to beef up their balance sheets with billions of dollars of tax deferrals.

Once companies receive settlement offers, they will have 30 days to accept, the agency said. The IRS did not name any of the companies, except to say they include Fortune 500 companies and many of the nation's top banks.

The proposed settlements follow victories by the IRS in federal court over the transactions, including against regional banks BB&T Corp (BBT.N) and Fifth Third Bancorp (FITB.O).

These victories prompted large second-quarter charges at such companies as Bank of New York Mellon Corp (BK.N), KeyCorp (KEY.N) and Wachovia Corp WB.N, which took charges of $380 million, $1.01 billion and $975 million, respectively.

Representatives of the three companies declined immediate comment.

According to the IRS, the leasing transactions allow companies to lease or buy large assets such as sewer systems, and then immediately lease them back to the original owners.

This, Shulman said, lets the companies defer "recognition of current income for tax purposes for many years."

The settlements call for companies to end their LILO or SILO transactions by Dec. 31.

"The IRS cannot allow LILO and SILO deals to stand," Shulman said. "The time has come for these shelter participants to put these cases behind them." (Reporting by Rachelle Younglai in Washington and Jonathan Stempel in New York: editing by Gerald E. McCormick and John Wallace)