WASHINGTON - The Internal Revenue Service is urging two community development districts in central Florida to settle tax law violations relating to tax-exempt bonds issued for The Villages retirement community by redeeming $355.35 million of them, paying the federal government at least $2.85 million, and agreeing to refrain from issuing any more tax-free bonds.

IRS agent Dominick Servadio Jr. outlined the terms of the proposed settlement in a two-page letter sent May 18 to Charles H. Smith, the chairman of the Village Center Community Development District and a broker at Morgan Stanley Smith Barney at The Villages. The letter was obtained and released by the Orlando Sentinel on Sunday.

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