UBS will give IRS 4,450 names of suspected tax cheats

— -- Swiss banking giant UBS has agreed to give federal investigators account data for 4,450 wealthy American clients suspected of tax evasion, U.S. and bank officials announced Wednesday, striking the deepest crack yet into Switzerland's historic reputation for banking secrecy.

IRS Commissioner Douglas Shulman, who announced the deal in the internationally watched tax standoff, said the accounts at one time held an estimated $18 billion in assets.

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He declined to say how much the IRS expects to recover in back taxes, interest and penalties once the account data is turned over.

The UBS holdings, some of which have been closed, include regular bank accounts, custodial accounts and nominee accounts suspected of being "sham trusts," Shulman said.

UBS has an estimated 52,000 accounts involving U.S. customers. But some of those owners have previously disclosed their holdings to the IRS, said Shulman. He described the 4,450 accounts stipulated in the deal as "what we wanted all along" — the holdings most suspected of tax evasion.

"We will be receiving an unprecedented amount of information on taxpayers who have evaded their tax obligations by hiding money offshore at UBS," Shulman said.

Under the unprecedented agreement, UBS will start notifying account holders shortly that their financial data will be turned over to U.S. investigators. The bank will give the account data to the Swiss Financial Tax Administration, which will decide which accounts will be turned over to IRS investigators.

The decisions will be subject to Swiss judicial review, but the Swiss government will expedite the handling of such challenges, IRS officials said. It is expected to take months before federal investigators receive financial data for all the accounts, IRS officials said.

UBS earlier this year handed over financial data for about 250 American-owned accounts that bore specific evidence of tax evasion. Federal prosecutors have filed criminal cases involving four of the account owners in recent months. Between that previous handover and the new agreement, the IRS expects to get information for more than 5,000 UBS accounts.