The United States Bankruptcy Court for the Southern District of New York has approved a settlement between the SIPA Trustee for the liquidation of Bernard Madoff’s firm and the United States of America, on behalf of the Internal Revenue Service, of around $326 million.

Bernard L Madoff Investment Securities falsely debited the accounts of 145 foreign accountholders for alleged income tax withholding and paid this to the IRS as tax on alleged dividends, according to a statement from the SIPA Trustee. However, as no securities were actually purchased on which the alleged dividends were paid, “no taxes should have been withheld,” the statement continues.

Once the settlement payment is received by the trustee it will be distributed to each foreign account holder’s BLMIS account.

After entry of a final and un-appealable order, which will include a channeling injunction, any further claims against the IRS with respect to such withholdings will have to be pursued in the Bankruptcy Court, the trustee said.