Judge grants delay in UBS tax case

— -- A federal judge in Miami agreed Monday to postpone an internationally watched trial in order to give the Justice Department and Swiss banking giant UBS time to seek a settlement of Washington's demands for the identities of 52,000 wealthy U.S. clients suspected of tax evasion.

U.S. District Judge Alan Gold granted the delay until Aug. 3 that both sides in the case requested Sunday, on the eve of a key evidentiary hearing that had been scheduled for Monday. The request marked the first time the parties had publicly acknowledged settlement talks in a case that has strained U.S.-Swiss relations, cracked Switzerland's reputation for banking secrecy and shaken the private banking industry.

Gold also scheduled a status conference via telephone for July 29.

The civil lawsuit hinges on the Internal Revenue Service pursuit of the identities of 52,000 wealthy Americans the tax agency believes are dodging taxes through secret UBS accounts. The accounts in question are believed to be part of what a Senate subcommittee last year estimated was $100 billion in annual tax evasion by Americans using offshore accounts.

UBS says it can't supply the client data because such a handover would violate Swiss banking secrecy laws. The Swiss government last week echoed that view, and said it would stop any release of the information — by seizing it, if necessary.

The Justice Department said Sunday any agreement that emerges from the settlement talks would have to include "information on a significant number of individuals with UBS accounts."

Federal prosecutors simultaneously increased pressure on UBS with a court filing that raised the prospect of stiff financial penalties or other action if the bank continues to fight a summons seeking the client data.