A local animal shelter has agreed to pay a $1,000 civil penalty and remove one of its key officers under a settlement with the state attorney general's office over allegations of improper tax filings.

The nonprofit Animal Care Foundation operates a no-kill animal shelter in Hawaii Kai.

The attorney general's office alleged that the foundation's tax filings with the Internal Revenue Service were incomplete and inaccurate.

The office also alleged that the foundation engaged in a conflict-of-interest transaction when it provided housing benefits for its former president, Sabina De Giacomo, and its vice president, Frank De Giacomo.

Frank De Giacomo agreed to step down from the foundation as part of the settlement.

Jerold Friedman, who recently was named president of the foundation, said the foundation agreed to settle with the attorney general's office to avoid a protracted legal dispute.

"There were some disputed numbers in our filing, and we thought it would be much better to pay a small fine and redo the filing," Friedman said.

The foundation was established in 1998 as a no-kill animal rescue and rights advocacy organization.

In February, Animal Care was awarded a contract to oversee the city's pet spay and neuter program but lost the contract two months later after city officials said the foundation could not fulfill the contract requirements.