D.C. Council member Harry Thomas Jr., who is alleged to have steered $300,000 in city funds to pay for personal expenses that included an Audi SUV, is trying to negotiate a plea agreement with federal prosecutors in the case, according to people familiar with the talks.

No agreement has been reached and there are still several obstacles to a deal, according to those people, who spoke on condition of anonymity because of the sensitivity of the talks.

Thomas and prosecutors declined comment about negotiations.

But Thomas’s lawyer, Frederick D. Cooke, denied television reports that a deal had been reached, that Thomas would resign, or that they will be in court on Thursday.

“We are absolutely, positively not going to court tomorrow,” Cooke said in an interview Wednesday.

Thomas has not been charged with a crime. But agents from the FBI and IRS raided his home last month and seized several personal items. The city’s attorney general outlined the allegations in a civil suit last year and referred the case to federal prosecutors in D.C.

View Photo Gallery: A look back at the FBI and IRS raid on Harry Thomas Jr.’s home.

The timing of any plea agreement is uncertain. People familiar with the talks said the two sides are close and that a deal could be reached later this week or next week. But there are still sharp disagreements over what charges Thomas would plead guilty to. Thomas does not want to plead guilty to stealing city funds.

Last week, Thomas began meeting with friends to apologize for the allegations hanging over his head. He told them that he expected to enter a guilty plea this week and expected to get a three-year prison sentence, according to friends of Thomas’s. He told them that the charges would be tax-related, such as failing to report the funds as income.

If a deal is reached however, any sentence would be up to a judge and be subject to federal sentencing guidelines based on whatever charges he might admit.

On Tuesday, Thomas missed a deadline for a $50,000 payment to the city as part of a settlement agreement with the attorney general’s office. Attorney General Irvin B. Nathan alleged that Thomas had steered the funds through groups he controlled to a variety of personal expenditures, including golf trips and a luxury sport-utility vehicle. He did not admit wrongdoing, but the settlement agreement required Thomas (D-Ward 5) to deliver a $50,000 cashier’s check to Nathan’s office “on or before” Dec. 31. Because that day fell on a long holiday weekend, the deadline was extended until close of business Tuesday.

Under the agreement, Thomas is required to make twice-yearly payments of $50,000 through 2013 and cannot start or operate a charity through 2016.

The missed payment and the chatter about an imminent plea deal come a month after the FBI and the Internal Revenue Service raided Thomas’s home. Agents seized a Chevy Tahoe SUV and a motorcycle.

It is not clear whether a deal with prosecutors would include his resignation from the council. Generally, prosecutors stay out of the affairs of local governments.

Thomas was not expected to attend Wednesday’s legislative meeting of the D.C. Council.Several council members declined to speak about the matter, saying they had no information to share. Council Chairman Kwame R. Brown (D) said he has received no indications that Thomas may be leaving the body as part of a plea agreement.

“I have not heard anything at all. Nothing has changed,” said Brown, who said he last spoke to Thomas “four or five days ago.”

In an interview, Mayor Vincent C. Gray (D) said he hasn’t spoken to Thomas since before Christmas and has received no indication the council member plans to resign.

But Gray, who has known the Thomas family for decades, said he hopes Thomas and federal prosecutors come to a quick resolution of the case for the sake of Ward 5 residents.

“This whole thing is an enigma to me. Just an absolute puzzle,” Gray said. “That is why I want to see the criminal justice system come to a conclusion.”

Council member Marion Barry (D-Ward 8) said Thomas should ignore the media chatter and keep fighting the allegations.

“I strongly believe you are innocent until proven guilty,” Barry said. “Mr. Thomas has not been charged or convicted of anything.”

Staff writers Tim Craig, Mike DeBonis and Del Quentin Wilber contributed to this report.

More news from PostLocal:

Occupiers’ new foe: freezing cold in D.C.

Bandaged bandit robs CVS

District reports second homicide of 2012

The impact of federal budget cuts

Column: Brace yourself for zombie pandas