U.S., UBS say they have a deal in tax-evasion dispute

NEW YORK -- The U.S. Justice Department and Swiss banking giant UBS have reached an agreement on the IRS's demands for the names of an estimated 52,000 wealthy American bank clients suspected of tax evasion, both sides told a federal judge Wednesday.

"The parties have initialed agreements," Stuart Gibson, a Justice Department tax division attorney, told U.S. District Judge Alan Gold during a morning phone conference. "It will take a little time for the agreements to be signed in final form … and when the final documents are signed, the parties will file a stipulation" to dismiss the case against UBS.

Neither Gibson nor attorneys for UBS provided details on the deal, which settles the closely watched case that has threatened to add new cracks to Switzerland's historic reputation for banking secrecy.

IRS Commissioner Douglas Shulman said the agreement "protects the United States government's interests" and that details would be released "when the Swiss government signs the agreement, as early as next week."

UBS Chairman Kaspar Villiger said bank officials "are grateful that the two governments reached this agreement to resolve this issue." He also thanked the Swiss government and its representatives involved in negotiating the deal.

William Sharp, a Florida tax lawyer who represents American UBS clients, said he expects the agreement to allow Swiss authorities to interpret bank secrecy laws more broadly and allow a "substantial handover" of names.

"I would guess that the U.S. would not enter into this agreement in the absence of a major fine and penalty without having at least several hundred if not thousands of names turned over," Sharp said.

The case hinges on Justice Dept. and IRS contentions that UBS must provide the financial data because the clients in question have evaded millions of dollars in U.S. taxes with secret help from the bank.

UBS in February agreed to pay $780 million in a settlement that deferred prosecution of charges that it had repeatedly sent bankers on clandestine trips to the U.S. to help American customers hide assets in offshore accounts that would not be reported to the IRS.