US, Switzerland reach deal on UBS tax dispute

NEWARK | MIAMI: The US and Switzerland reached an agreement in principle to settle a Justice Department lawsuit against UBS seeking the names of 52,000 account holders, a lawyer told a federal judge in Miami. A settlement may be submitted in writing on August 7, Justice Department attorney Stuart Gibson said on a telephone conference call. No details of the accord were provided.

���The parties have reached an agreement in principle on the major issues,��� Gibson told US district judge Alan Gold. ���There are a couple of minor issues that need to get resolved. We expect to be able to resolve them in the coming week.���

The Internal Revenue Service seeks the data because it suspects American account holders may have evaded taxes. Switzerland called the case a threat to its sovereignty and said an adverse ruling by Gold could force UBS to violate criminal laws protecting bank secrecy. The Justice Department said a settlement must force UBS to provide data to the IRS on a ���significant number��� of account holders.

The settlement will avert a two-day evidentiary hearing that Gold planned to begin on August 3. The US sued UBS on February 19, a day after the largest Swiss bank by assets agreed to pay $780 million to defer prosecution for helping wealthy Americans evade taxes. UBS agreed to an unprecedented breach of Swiss secrecy laws by giving the Internal Revenue Service data on more than 250 accounts.

US secretary of state Hillary Clinton is scheduled to meet Friday with Swiss foreign minister Micheline Calmy-Rey in Washington to discuss the case. Since the Swiss handed over the 250 names, three UBS clients in the US have pleaded guilty to filing false tax returns. On July 28, a New York toy salesman, Jeffrey Chernick, admitted filing a false tax return that concealed $8 million at UBS. Chernick implicated four other people while detailing a $45,000 bribe to a Swiss government official. Swiss authorities are investigating.

UBS, based in Zurich, avoided prosecution by admitting it helped taxpayers hide money in Swiss accounts to dodge paying US taxes. UBS admitted that from 2000 to 2007, its Swiss private bankers helped wealthy Americans evade US taxes by setting up sham offshore companies in tax havens. UBS said it created misleading forms saying those offshore companies, not taxpayers, were the beneficial owners.

After a July 29 hearing on the case, attorneys of UBS and the Swiss and US governments submitted a proposed witness list and allocation of time for the two-day evidentiary hearing. After opening statements, UBS lawyers would cross-examine IRS deputy commissioner Barry Shott and IRS agent Daniel Reeves.

Justice Department lawyers would then cross-examine UBS witnesses Isabelle Romy, a former deputy justice at the Swiss Federal Supreme Court; Urs Zulauf, head of legal, enforcement and international affairs at the Swiss Financial Market Supervisory Authority; and Rudolf Wyss, deputy director of the Swiss Federal Office of Justice.