The Justice Department rarely brings criminal charges against a corporation, since the result is usually a death sentence. Examples include Drexel Burnham in the late 1980s and Arthur Andersen several years ago.

Now, according to The Wall Street Journal, the accounting firm KPMG is in intense negotiations with the Justice Department to try to stave off such an indictment.

KPMG is accused of having provided advice on exotic tax shelters to wealthy clients from mid-1995 to 2002. Essentially, through complex offshore trusts, these tax-avoidance structures would allegedly minimize capital-gains taxes, such as when a client generated a windfall -- selling a company, for instance. The Justice Department has deemed the structures to be "abusive tax shelters."

True, if a corporation is convicted of a crime, it does not go to jail. But that's little consolation when the stigma of a conviction is usually enough to destroy the company. Who, after all, would want to do business with such a company? Who would want to work for a company like that?

For its part, the Supreme Court seems skeptical of criminal indictments against corporations. It recently handed down a unanimous decision to reverse the conviction of Arthur Andersen.

The ruling came too late, though. Thousands of employees had already lost their jobs because of Andersen's implosion, and clients had gone off to find new auditors.

Those who pay their taxes will find it repugnant to see big corporations making huge fees by helping wealthy individuals avoid paying taxes. But killing a large company like KPMG seems to be too harsh of a penalty. The company has roughly 18,200 U.S. employees, and enormous social implications could ensue if a good portion of these workers found themselves jobless.

The loss of KPMG would leave only three major accounting firms. Besides less competition, that situation could also lead to higher prices for corporate customers. So yet again, we're looking at a social cost of sorts, only this time to corporations. That may not be the intention of regulators, but it could well be an unintended outcome.

A better solution is what's called a deferred prosecution, which would impose a hefty fine and impose monitoring over KPMG. Most importantly, KPMG would need to fully cooperate in bringing criminal prosecutions against the partners that facilitated the abusive tax shelters. A deferred prosecution is what Computer Associates (NYSE:CA) got several years ago; Bristol-Myers Squibb (NYSE:BMY) agreed to such an arrangement just this week.

Holding KPMG accountable will be effective in deterring such activities in the future. Yet so far, of the 30 partners who have allegedly participated in these structures with KPMG, none has been given a criminal indictment. Stay tuned to see whether that will change.

Fool contributor Tom Taulli does not own shares of companies mentioned in this article.